Edited Transcript of TKWY.AS earnings conference call or presentation 12-Aug-20 6:30am GMT

In June, we announced the proposed transaction with Grubhub, while at the same time, we created a single brand entity for all Just Eat Takeaway.com markets to benefit from global brand’s recognition. The integration with Just Eat is on track and progressing well. The Swiss business was already successfully migrated to our central European IT platform and other markets will follow in due course.

Last but not least, on the back of the strong momentum, we started an aggressive investment program, which we believe will further strengthen our market positions.

On Slide 6, you’ll find the financial highlights for the first 6 months of 2020. Our active consumer base now totals 54 million people, an increase of 21% year-on-year. This resulted in 257 million orders for the period, a growth rate of 32% compared with the first half of 2019. These orders represent a gross merchandise value of EUR 5.7 billion and a revenue of EUR 1 billion, up 44% compared with the first half of 2019. Our gross profit was EUR 630 million in the first 6 months of 2020 or EUR 2.45 per order. Marketing expenses were EUR 165 million and grew substantially less than order and revenue growth. As a result, marketing as a percentage of revenue improved by 7 percentage points to 16%, driven by gross margin growth across our businesses. Adjusted EBITDA for Just Eat Takeaway.com grew by 133% to EUR 177 million in the first 6 months of 2020 compared with the first half of 2019.

Just Eat Takeaway.com is in the fortunate position to benefit from continuing tailwinds. The most important drivers of the network effects that support our business model improved significantly. In the last 12 months, Just Eat Takeaway.com added a record number of new restaurants and active consumers. At the same time, the number of orders per returning active consumer and the churn also improved, leading to a significant acceleration of top line growth.

Our businesses have healthy gross margins, and all our segments were adjusted EBITDA positive in the first 6 months of 2020. As said, Brent will take you through the financial performance in detail during his part of the presentation. The integration with Just Eat is on track and progressing well. Jörg will share more details on that specific subject in a moment.

On the back of the current momentum, we have started an aggressive investment program which we believe will further strengthen our market positions. We are also excited about the proposed wholesale transaction with Grubhub. We currently expect that the shareholder circular will be published towards the end of August, and the extraordinary general meeting will be held in October.

That brings me to the end of my update. I will now hand over to Jörg.

——————————————————————————–

Jörg Gerbig, Just Eat Takeaway.com N.V. – COO & Member of Management Board [3]

——————————————————————————–

Thank you, Jitse, and welcome to everyone. I will give an overview of the progress of the integration with regards to the Just Eat merger and the strategic initiatives we are taking to expand our market-leading positions. The CMA approved the merger with Just Eat on the 23rd of April 2020. So we’re now almost 4 months into the merger. The integration with Just Eat is well on track and progressing. Reducing complexity is 1 of the key goals of the integration. So specific focus is on reducing the number of IT platforms as well as going towards the One Brand approach.

With regards to IT, the Swiss business was already successfully migrated to Just’s central European IT platform in the 1st week of June. Other markets will follow in due course with France migrating next. We expect the technical migration of the Continental European businesses to be completed in 2021.

On branding, all countries now share the same logo design and will be positioned similarly to benefit from global brand recognition. We are also progressing well on the design of the new organization, which we are aiming to implement by the end of the year.

Turning to Page 10. While the integration is well on track, we, in the meantime, started an aggressive investment program to expand our market leadership. 90% of our GMV is generated in markets in which we are #1. Despite these strong positions and current growth, we believe that the former Just Eat markets have been under-invested in recent years. To strengthen, expand or recapture market-leading positions throughout our territories, we will invest significantly, predominantly in the U.K., Canada, Australia, Italy, Spain, France and several other ex Just Eat territories. The investments will focus around building further network effects including hiring salespeople to increase the choice of restaurants, higher marketing investments to build top-of-mind brand awareness and offer competitive pricing to our consumers. As mentioned on the prior slide, we are moving to the One Brand, One Platform, One Company. We already reduced complexity in the organization significantly by moving all countries to the same logo, and we are in the process of reducing the number of IT platforms.

Last, we are also rolling out broader initiatives, such as the Scoober model in which all our drivers are employed. And in due course, also Takeaway Pay. We are convinced that all of these initiatives will further support strong growth for the remainder of the year and beyond.

With that, I hand over to Brent for the CFO update.

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [4]

——————————————————————————–

Thank you, Jörg, and good morning, everyone. Before I start, I’d like to say that any financial figure I mention is in euros.

Please move to the next slide, highlighting the development of our 3 main growth drivers. As indicated before, we experienced significant growth in our key — 4 key market — business drivers. As a result, we ended the period with 54 million active consumers, improved consumer retention and increased order frequency.

Turning to Slide 14, which provides the order development as a result of the improved business drivers. The number of orders processed in H1 ’20 was 257 million, an increase of 32% versus the first half of 2019.

Please turn to the next slide, where we show the gross merchandise value or GMV. Most notable is the increased basket value compared to the previous periods. This is mainly due to the change in consumer behavior driven by the coronavirus. In H1 ’20, the basket value increased by EUR 1.60 compared to the same period of last year. As a result, the GMV grew faster than our orders, up 42% for the period against order growth of 32%. The AOV peaked during government-imposed lockdowns and has since returned to a lower level, although still higher than before the start of the pandemic.

Now on to Slide 16. Due to the aforementioned developments, revenue grew by 44% compared to H1 2019. This revenue includes the relief packages we implemented in various markets to support restaurants with the economic impact of the coronavirus lockdown.

Next slide explains our gross profit development. Gross profit increased to EUR 630 million in the first half of 2020, a year-over-year increase of 34%. Our 4 key segments: U.K., Germany, Canada and the Netherlands contributed 89% of incremental gross profit growth. We believe gross profit is a more important metric than revenue in our industry as there are very few markets globally where delivery orders are growth profit-neutral or positive. As a result, we are now also reporting this on a segment basis. In H1 2020, we realized a gross margin of 61%, which is 5 percentage points lower than last year. This was purely due to a mix effect of more delivery orders.

On Slide 18, we will focus on our cost components. All figures on this slide exclude nonrecurring and nonoperating items, which will be addressed later. Our cost increased by 34%, mainly driven by investments in delivery expenses and staff. Delivery expenses include mainly the cost of our couriers. These costs increased with 67% year-over-year to EUR 340 million, as you can see. Delivery costs now represent 37% of total costs. Delivery costs are now significantly higher than our marketing expenses and reflect the substantial size of our delivery business. Staff costs increased by 32%, which includes expansion of IT, product, customer services and logistics teams. The other operating expenses increased by 13%, which is primarily driven by continuous investments in IT, professional services fee, additional recruitment costs and other staff-related expenses. In the first half of 2020, our marketing expense was at the same level as in the first half of 2019 compared with an increase of 32% in orders, which is — which proved that the economies of scale work. Marketing as a percentage of revenue decreased in all our segments, driving our EBITDA improvements. However, there are some factors which influence the cost level in H1 of 2020. The H1 2020 do not fully include the anticipated investments in Scoober and marketing, which we announced as part of the merger to strengthen the market position in some of the Just Eat geographies. The reason for this is the fact that we effectively are a combined company since mid-April. In addition, we delayed some expenses due to the coronavirus.

Now we will move to Slide 19. In the first half of 2020, our adjusted EBITDA increased EUR 277 million from EUR 76 million last year. Our adjusted EBITDA margin improved from 11% last year to 17% this year. All previous mentioned factors, such as the increased AOV, fees and marketing and economy of scale contributes to this.

Now I will move you to Slide 20, which describes our adjusted EBITDA to loss bridge. We had a very strong first half with EUR 177 million in EBITDA. However, the loss after tax for the period is minus EUR 158 million, which is almost fully caused by nonrecurring items. This is presented in this bridge, and I will describe the major components. Share of loss of associates represent the non-controlling interests in (inaudible) or Mexico and our share in iFood. Our share of results of associates and joint ventures was minus EUR 31 million. Depreciation and amortization amounted to EUR 85 million for the first half 2020. This is primarily driven by the amortization of the acquired intangibles of EUR 3.3 billion, including the assets recognized on the merger of Just Eat. Acquisition-related expenses and integration costs for H1 2020 were $152 million, primarily related to advisory fees connected to the Just Eat and, to a lesser extent, to Grubhub combinations.

Now on the next slide, where I take you through the cash flow. We ended the half year with EUR 525 million of cash from a stand-alone position of EUR 50 million at the beginning of the year. The consolidated adjusted EBITDA added EUR 177 million of operating cash in H1. We have spent EUR 74 million on cash investments with EUR 50 million of that being funding for iFood and our Mexican joint venture. We show the cash flow from our financial activity separately. In April 20, we raised EUR 700 million via an ABB and a convertible bond issue shown here net of issue costs. We used EUR 343 million of debt to repay the existing revolving credit facilities of both Just Eat and Takeaway and the rest went into cash — in cash.

Now we will move on to look at the 5 segments and the head office cost in detail. Firstly, the U.K. on Slide 23. The U.K. is our largest market with an order growth of 18% in H1 ’20. We are excited with this very strong growth, in particular in the marketplace business. GMV growth exceeded order growth by 10 percentage points to 28%. Revenue growth was, as you can see in Slide 24, also 28%. I’d like to mention that to support the restaurants during the coronavirus outbreak, we announced a commission release, which impacted the revenue with around EUR 14 million. We also provided further support such as discount for NHS staff and support for our couriers. Gross marketing in the U.K. reduced by 4% points, mostly due to the increased share of delivery orders. Despite the slight decrease of the gross margin, we improved our EBITDA margin.

Now I will turn to Slide 25 to review Germany. In Germany, we processed almost 50 million orders in the first half of 2020 on a like-for-like base. So including all the H1 ’19 orders of the acquired DH German business, order growth was 34%. Looking at the performance of Germany, we can conclude that our German business is really benefiting from the scale and provides the synergies as anticipated. This is reflected on Slides 25 and 26. Now moving to Canada. Skip did very well in H1 ’20 with an order growth accelerating to 59% in H1 and GMV growing by 67%. This was again driven by the increase in basket value.

Next slide. Revenue grow by 49% and reached EUR 228 million for the first half of 2020. This was less than the order growth. However, this is due to the temporary commission relief provided to our restaurants during the coronavirus lockdowns. Despite these measures, we maintained a gross margin of 35%, which was in line with H1 ’19. With the reduced marketing spend as a percentage of revenue, and the efficiencies in staff and other OpEx, the Canadian business delivered an impressive EBITDA result of EUR 29 million at a 13% margin.

Turning to our Netherlands business on Slide 29 and 30. We continue to see strong progress of our Dutch business due to its strong market position, our continuous investments in delivery and the impact of the coronavirus.

Now we move to the Rest of the World segment on Page 31. The Rest of the World segment include 13 European countries as well as Australia, New Zealand and Israel. We achieved order growth of 18% and processed 71 million orders in the first half. Most countries performed strongly with Australia, Poland and Belgium among the fastest growing. Some of our countries, such as France, Italy and Spain, faced severe lockdowns and did not spike in the same way as the other markets did. The same was visible in Israel, where most of our business is B2B, and which, as you can imagine, suffered from the coronavirus lockdown measures. Most of these markets have now recovered to normal pre-pandemic levels.

Proceeding to the next slide. Our revenue increased by 37%, faster than GMV. Due to growth in — of the delivery share, the gross margin reduced by 12 percentage points, but we maintained a stable EBITDA margin due to improved marketing efficiency.

On the next slide, I show you the headquarter costs. Takeaway previously allocated all head office costs to the segments. However, we’ve decided to change this and aligned it more with Just Eat’s approach of reporting head costs separately. We believe this is a more accurate reflection of our business model and provides a more accurate picture of country performance. All figures published are on a like-for-like basis following this new methodology. For the first half year of 2020, head office cost increased by 70% year-over-year and represents 8% of total revenue, a 1 percentage point increase versus last year. It is worth mentioning that technology and product costs continue to be allocated to the countries as we consider these as core operating expenses.

We proceed to the next slide, where I’m pleased to update you for the first time in iFood. I know it is an area which is special attention for some of you. iFood is the leading player in the Latin American market with a clear leading position in Brazil, by far, the biggest food delivery market in Latin America. Although Just Eat Takeaway.com holds 33% in iFood, the numbers presented here are for 100% of the business. As you can see from all the charts, iFood has continued its incredibly strong momentum with order GMV and revenue doubling or more during the period. Like the rest of our markets, iFood saw an increase in demand due to the pandemic, adding over 100 million incremental orders compared to the last year, and exiting the period processing with around 40 million orders on a monthly base.

On the next slide, we see that iFood’s H1 ’20 revenue exceeded the revenue generated in the full year of 2019, an outstanding performance. We are happy to report that the team has taken another big step towards profitability with the EBITDA margin improving by more than 70% points, driven by technology improvements and operating excellence. This reduction in losses is a byproduct of our top line growth, and we see a bright future ahead.

That concludes the financial presentation. I will now hand over to Jitse.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [5]

——————————————————————————–

Thank you, Brent. I will continue with the conclusion of the presentation on Slide 37. In the first 6 months of 2020, we continued our strong order growth and revenue growth, showing the effectiveness of our growth strategy. We are convinced that our order growth will remain strong for the remainder of the year.

Gross margin growth led to a significant increase in adjusted EBITDA across all segments, underlining healthy margins and the strength of our businesses. The integration of Just Eat is well underway and on track, including rebranding to the same logo to benefit from global brand recognition and platform unification in Continental Europe. On the back of the current momentum, we have embarked on an aggressive investment program, and we will significantly invest in network impacts in the United Kingdom, Canada, Australia, Italy, Spain, France and several other Just Eat markets. The investments will further strengthen our already great market positions, and we are convinced that our order growth will remain strong for the remainder of the year.

Operator, I would like to open the call for questions.

================================================================================

Questions and Answers

——————————————————————————–

Operator [1]

——————————————————————————–

(Operator Instructions) And the first question is coming from Joseph Barnet-Lamb, Crédit Suisse. .

——————————————————————————–

Joseph Barnet-Lamb, Crédit Suisse AG, Research Division – Research Analyst [2]

——————————————————————————–

I have many, but I will kick off with 3, please. Starting with Germany. So German ramp-up and profitability is obviously very impressive in the period. Have you reached peak run rate synergies in Germany yet? And can you talk a little bit about your short- to medium-term outlook for costs and margins in Germany?

Secondly, your comments around aggressive investment. Can you help us understand a bit more of the scale and nature of those investments? And Brent mentioned the investment wasn’t fully reflected in 1H. So for the period that you owned the Just Eat assets, were you at run rate investment levels yet?

And then finally, on iFood. Can you update on your thoughts with regard to potential sale, but also the growth rates are very substantial. Now Brazil is at a different stage with regard to the pandemic. So can you give us a little bit more color with regards to what you’re seeing in Brazil? And the growth — particularly if growth is accelerating through the period?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [3]

——————————————————————————–

I will respond to the — let’s say, the last 2 questions, I will give the first question to Jörg, if you don’t mind, but let me start with the question around iFood. We have also seen, of course, what’s going on in Brazil and needless to say, what the guys in iFood are doing is quite impressive. The order growth is very substantial, and the revenue growth is even more impressive if you look at it. That brand is — at least, it looks like that brand is going to overtake the whole of Just Eat Takeaway in terms of orders. So it’s a magnificent asset. We have said, of course, that we would sell our stake in it. The reason for that, if you recall, is that we do not have control over that entity. And of course, we believe that we understand the business very well, but that’s entirely useless if we can only spend, let’s say, 2 board meetings a year on the asset. We do believe that, that asset would be far better off under our control than under anybody else’s control, but we are where we are. And if somebody bids the price that we feel is adequate and accurate for that asset, we will sell it. But then having said, again, it’s a very large asset. It’s 1 of the largest assets in the world and it’s performing fantastically. The aggressive investments and the way you need to look at this is that in some parts of especially the Just Eat side of our company, we believe that there has been significant underinvestment over the past couple of years. Now you should also note that because of the coronavirus crisis, the Just Eat assets are actually growing faster than the Takeaway assets. So that is certainly very helpful to us. That doesn’t mean, though, that there is a couple of attention points for the new management for the Just Eat businesses. And you can think about a couple of things that we’ve already said in the past. We have commented on the U.K. We believe and we still believe that tens of millions of euros need to be invested in the U.K. The reason for that is that we need to invest in sales. We need to invest in a better logistical proposition in the U.K., not necessarily more logistics, but better logistics. And also, we believe that a couple of things need to happen to the Just Eat brand in the U.K. That has not changed from our perspective. What did change from our perspective is how we look at other countries in the Just Eat portfolio. There’s a couple of countries that clearly have seen underinvestment. And the way this works with food delivery website is that you will, on the outside, not really notice that because as we’ve explained many times, we grow because we add new customers and the new customers come back a certain amount of times a year, and that’s essentially how our network effects work, but they need to be fueled. Now we are conscious of the fact that the coronavirus has fueled our network effects to a dramatic extent. So we are essentially where we should have been in 2021. We are grateful for that, but it doesn’t mean we’re now going to be all excited that there is a deadly virus roaming around. We are going to take further benefits of the current situation for our company. So that means we’re going to invest in the places in which we see most competition. You can think about places like London, places like Paris, places like Sydney, and we will invest very heavily in those places because we can. We’re not going to invest in Pakistan or Japan or any other territories in which we are not active. We’re going to invest in the heartland of the places in which we are really strong. And that, therefore, should have a material effect also on the growth rates in those places.

So that’s the way you need to look at our investments. We won’t put a label on what amount we’re going to invest. We’ve given you, of course, some indications also in this call. It also depends on the reaction of those brands to those investments. It depends on further trajectory of the lockdowns and what will happen also in — at the end of the year, of course, with the virus potentially coming back to a higher extent than what we are seeing today. So there’s a lot of arrivals. I think it’s important to understand that the underlying effects for us are far more important than the temporary effects of the virus. We’ve seen many new customers, many new restaurants, higher order frequency, less churn. That is far more important than just the temporary effect of something because that actually goes into our business model immediately. Our users come to our brands because they were using the phone. Now we don’t imagine that all of a sudden, the users when this virus goes away, are all going to go back to the phone. They will stick with our brands. So a lot of what we’re seeing is going to be permanent. And a couple of things we do believe are going to trend back to normal after the virus goes away, whenever that’s going to be, and you can think about the AOV that will trend down because of the mix effect of offices reopening. But again, we can’t predict the future. We do not know when offices will reopen. Our best guess is somewhere next year in Q2. So that’s the aggressive investments that we talked about. Jörg, if you could answer the question about Germany?

——————————————————————————–

Jörg Gerbig, Just Eat Takeaway.com N.V. – COO & Member of Management Board [4]

——————————————————————————–

Sure. To your first part of the question with regards to Germany, yes, we have achieved more than EUR 60 million of estimated cost synergies as we’ve announced at the date of the transaction with the Delivery Hero German business. And these synergies came mainly from a significant reduction in marketing expenses, driven by the One Brand strategy.

And the second part of your question with regards to some sort of outlook or what was driving actually that profitability. I mean, first of all, similar to what Jitse was explaining, obviously, also in Germany, we had very strong top line growth driven by a lot of new restaurants, which have been added to the platform, which was also driving, again, a lot of new customers coming to the platform, reduced churn and higher reorder rates. And similar, again, to Jitse’s comments, we are not expecting these new customers all of a sudden have a different core behavior like our prior new customers. So we don’t expect them to turn back to the phone. So we see that momentum continuing also in Germany.

Then secondly, also on a gross margin perspective in Germany, while we actually were increasing the share of delivery also in Germany, we were actually able to keep the gross margin stable, which indicates that we actually got quite some nice grip on efficiency, especially also in the logistics part of the business. There, we actually had the aim after the Delivery Hero transaction to focus on really improving the business first. So on the logistics side, we didn’t really expand into new cities, but rather improved the business in the cities where we’re at, and that actually concluded in some nice increase in the efficiency on the Scoober side of things.

And then last, also at the beginning of the pandemic, we were actually a bit cautious more on the spending side of things. And for example, also the UEFA championship was postponed. So that also had, at the beginning, some reduction in marketing expenses, but they will occur, obviously, in 2021 then. That all together — put together, obviously, had some very positive impact on profitability in Germany.

——————————————————————————–

Joseph Barnet-Lamb, Crédit Suisse AG, Research Division – Research Analyst [5]

——————————————————————————–

Excellent. Just on the level of investment in H1, Brent mentioned the investment wasn’t fully reflected in the period. For the period that you did own Just Eat, was investment in place at that point? Or will it sort of all come in H2?

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [6]

——————————————————————————–

No. We have increased investments at the end of the first half, but you will be conscious that we only became the management of Just Eat in April. So obviously, the costs are mostly in the second half of the year. But that also means — it also means that the benefits are going to be in the second half of the year.

——————————————————————————–

Operator [7]

——————————————————————————–

(Operator Instructions) And the next guest question is coming from Mr. John King, Bank of USA.

——————————————————————————–

John Peter King, BofA Merrill Lynch, Research Division – Research Analyst [8]

——————————————————————————–

Just, I guess, 2 follow-ups really. The U.K. business, would you expect that to see — and maybe you can comment on how the delivery percentage has trended there directionally in the first half and perhaps more importantly, I’m trying to understand how much of a component that is in terms of your investment. Also, I mean, Jörg, you perhaps connected mentioned something about competitive pricing. What does that mean in practice for your business, obviously, largely marketplace business? Would that mean more vouchering, lower commissions? Or what does that really refer to?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [9]

——————————————————————————–

I will respond to that last question. I’ll give the first one to Jörg again. Regarding vouchering, vouchering is what we see all our competitors do. The cohorts on vouchers are 1 order. It’s a waste of money, and it will just increase the revenue, and you will all applaud it because the revenue will go up. But it doesn’t make any sense. If — you need to look at our customer behavior. So people order about, let’s say, 10 times a year, no more than that. So you have 365 days to give somebody a voucher. Now unless you do that exactly in 1 of these 10 days, it might have an impact, but you’re not going to do it on exactly these 10 days. So you’re going to essentially give people free foods. So you’re in direct competition with people cooking, and it doesn’t — just doesn’t make sense to us to hand out a lot of vouchers. So certainly, that’s not what we’ll be doing. If Jörg is talking about competitive pricing, I think what a lot of people do not realize is that, first of all, all the marketplace restaurants are far cheaper than the logistical restaurants. It’s a very different segment from what the logistical players are offering. Our logistical business, on top of that, is far cheaper than all the logistical businesses are offering. Our delivery costs to consumers are far lower in most of the countries, it’s even free for people to order. And I think that’s important because this is sometimes not picked up by analysts. Already now, with these delivery costs being much higher than Takeaway’s and Just Eat’s delivery costs on logistics, already now, these businesses are very loss-making. So you can only assume that to get out of this loss-making situation that those delivery costs have to go up. In our case, they do not have to go up. Our business in most countries is perfectly profitable. And I think it’s a major difference between us and the other places. And on top of that, of course, when you look at the way people deal with their staff and the delivery carriers, we tried to adhere to the law. And other players might not do that. And of course then if you haven’t done that for a couple of years, the lawmakers will figure that out and charge you some social security premiums and some insurance cost as well. So I think that’s important. And to the remark for the U.K., Jörg, if you could comment?

——————————————————————————–

Jörg Gerbig, Just Eat Takeaway.com N.V. – COO & Member of Management Board [10]

——————————————————————————–

Sure. So if you look at the delivery share in the U.K., we actually increased the delivery share from 6% to 8% in the respective period. But if you look more detail throughout the period, once the pandemic broke out, you actually saw that a lot of the restaurants were actually closing, who are usually using the delivery service or the logistical service. So actually, that share for a certain period of time went down, which also delayed the rollout of some of our key accounts, which we’ve most recently signed up. But by now, actually, we are already back to higher levels prior to COVID, and we will continue to roll out pretty aggressively some of these new signed-up stores, which we’ve put under contract such as especially Greggs and McDonald’s. So by the end of the year, we’re expecting to have rolled out more than 700 million stores of the McDonald’s side and more than 200 on Greggs. So there will be quite some more traction on the logistics side also in the second half of the year.

——————————————————————————–

Operator [11]

——————————————————————————–

And the next question is coming from Georgios Pilakoutas from Numis.

——————————————————————————–

Georgios Alexandre Bela Pilakoutas, Numis Securities Limited, Research Division – Analyst [12]

——————————————————————————–

Just one, interested to hear an update on your thoughts on logistics, especially Canada, where we can see us achieving double-digit gross GMV margins. Does this change your perspective on profitability of logistics at scale at all? And I guess, in particular, with reference to the U.S. where you’ve commented before that there’s more similar tipping dynamics. And then a second one is on — we’ve seen logistic competitors aggressively expand their grocery and non-prepared food assets. Could you update on your thoughts on this?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [13]

——————————————————————————–

Sure. Regarding our view on logistics, our view on logistics is — has always been the same. And we know that consumers like it, and that’s why we offer it. We also know that you can’t make money with it in Europe. And the clear difference with Canada because you see that actually, we own, I think the only profitable logistical business on earth, I mean let’s face it, the Canadian one. And the difference there is, apart from, of course, the same type of market leadership that we see in our marketplace businesses across Europe is that Canadians they tip, there’s higher basket sizes, and they are willing to pay a delivery piece. So in essence, Canadians are paying about CAD 10 more than what Germans, Dutch people and the bridges are paying for their food. So then, yes, of course, if all the Germans would just be so kind to pay an additional EUR 10 on order, we would be making EUR 12 on an order rather than EUR 2, right? So our view on that never changed. And if you ask us about the U.S., we’re not arguing that you can’t — you can make money if you run a decent shop in logistics in countries like Canada and the U.S., it needs to be a decent shop, though, and there’s not too many decent shops around. We happen to own quite a lot of them but that’s not — that’s just not how most parties operate. They do not run decent jobs. There’s quite a lot of competition on it. And also in the U.S., the marketplace business is far superior to the logistical business, simply because, in one case, you send a message and in the other case, you need to put somebody on the bike. There’s a really big difference in the business model. And 1 of the reasons is that we have a solid EBITDA performance is that most of our business is not logistics. And it should also not be the case in most of our businesses logistics in Europe because we would not be able to return any EBITDA. So I think that’s the more important view on logistics. I mean, we’re not negative on it. We do believe in the visibility of it, and we like all these software aspects, but we don’t like the profitability of it.

Regarding grocery, that is just to fool all the analysts into thinking that things are going well. There are no margins on grocery. There is margin on foods because food is made of ingredients. So you can imagine that if you have dough, tomatoes and cheese, you can make a pizza, and you can charge whatever you want for the pizza as long as it’s a reasonable cost to the consumer. But a carton of milk does not have a margin. I am sorry, just doesn’t. So if you’re going to deliver that with an already loss-making logistical network, you’re not going to make any money. You’re going to create more revenue.

——————————————————————————–

Operator [14]

——————————————————————————–

And the next question is coming from Marcus Diebel, JPM.

——————————————————————————–

Marcus Diebel, JPMorgan Chase & Co, Research Division – Research Analyst [15]

——————————————————————————–

Just very quick questions, I guess. The first month is on the level of aggressive investments. You obviously elaborated a lot on this. What I still don’t fully understand, particularly in the U.K., is this the kind of split between real gross margin losses, yes, and investments, but the sounds of it is proper investment as in what you said, marketing, tech and so on rather than increasing loss from gross margin losses and higher delivery shares. So just to — to just follow-up, if that’s the right way to think about it and how to read your answer?

And then the second point on — is for Jörg again. On the U.K. delivery share, you said 6% to 8%, it has moved. I thought I need to check, but on one of the Just Eat slide, they mentioned that it was much higher previously in the U.K. So — but you’re saying 6% to 8% is the move in delivery share?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [16]

——————————————————————————–

Thank you. I will leave both questions to Jörg.

——————————————————————————–

Jörg Gerbig, Just Eat Takeaway.com N.V. – COO & Member of Management Board [17]

——————————————————————————–

Yes. So I mean, to answer your last one, yes, it went from 6.5% to 8.2%. And to your first question, indeed, the investments are mainly an increase of number of salespeople to really improve the choice and also marketing spending, which is really increasing top-of-mind brand awareness. I mean in the ideal case scenario, you’re actually able to fuel network effects on both ends, on the logistical side of the business and on the marketplace side of the business. And as you see in, for example, the Netherlands or also in Germany, we’re actually able to increase profitability while we’re increasing the share of delivery. And so actually, if you get the trick right on the network effect, you actually don’t really have to invest because 1 can be subsidizing the other. And that’s then not necessarily is a need for any investments on that side. While the gross margin might be dropping, but the absolute amount of profitability is actually increasing.

——————————————————————————–

Operator [18]

——————————————————————————–

And the next question is coming from Marc Hesselink, ING.

——————————————————————————–

Marc Hesselink, ING Groep N.V., Research Division – Research Analyst [19]

——————————————————————————–

The first question is, actually, what are you seeing in your restaurant base, you’re having very good numbers. But what’s the health of the restaurant rate now after a couple of months into COVID-19?

And second question is on the head office. Those costs increased quite significantly. What kind of investments are you making that will benefit the group over time? And what kind of run rate is normal for that business?

And the final one, clarification on the unified strategy for delivery. Is it correct that you said that you will employ all your drivers or delivery people throughout your footprint?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [20]

——————————————————————————–

I’ll start with the last question. We do not really care whether we employ our drivers or they are freelancers, but we do care about insurance, and paying our fair share of taxes and social security on the drivers. That is important to us. Now in Europe, because we’ve looked at all these countries, we do not believe that the freelance model in most countries is either legal or sustainable for a longer period of time. There’s quite some court cases against our competitors in several European countries. We feel that that’s not the way forward in Europe. And it is likely in Europe that we will only have employed delivery staff at some point in time. And we’ll move into that direction in the ex Just Eat countries. The situation in the U.S. is likely to be different depending on lower legislation. But also there, we would be interested in insuring our people decently and offering people a decent salary. It’s difficult for us to make that assessment now. As you know, we don’t own Grubhub yet. But we will certainly look at it. So that’s not a firm yes. But directionally, that’s the way to think about it, at least in Europe.

Then the restaurant base. So what we’ve seen happening is actually, despite what people think, a quite significant increase for business for the vast majority of our restaurants. The delivery restaurants, and as you know, that’s by far the majority of our orders, they have seen quite a significant increase in business, just like also our business has seen that because we, of course — we live off those restaurants. So that — there is a similar increase of orders. We have seen, though, in March that a lot of restaurants closed, those restaurants were predominantly logistical restaurants. We have seen a huge increase of marketplace restaurants that were not signed up with our networks because these investments might have had a dine-in function, a pickup function and the delivery function. And because 2 of these fell away, they needed additional revenue that we could actually supply. So we’ve seen a lot more market-based restaurants enter, and this is also why we’re so comfortable with our development because, yes, more restaurants means more orders for us. It’s as simple as that. On top of that, we’ve seen in many countries, especially countries in which we started the rollout of logistics later, that we have seen a lot of nice brands, poké bowl restaurants, QSRs, et cetera, et cetera joining our service because also they needed more orders. You will remember that even a large chain like McDonald’s was closed in many countries. And therefore, they were also finding clients to join our networks, and we will still see a lot of these things happen over the course of the next couple of months. And of course, we talked a little bit about McDonald’s and Greggs as an example, but that’s happening all over the place. You’ve seen us also sign a deal with AmRest regarding adding their brands to our service. And we’re expecting more of that. And that all is very good for us because the more variety, the more restaurants, the more this will process. And these are these underlying trends that are far more important to us than a temporary coronavirus hitting all companies on this earth.

Then regarding HQ costs, you may think about tech costs, product costs, supporting staff, all of these things. We realize, of course, that because we have put 2 companies together that we needed to come up with a new type of reporting. We’ve been transparent into this so you can go back a couple of years. And I think this — part of this is also a result of us doing that and making it more transparent for everybody to understand how our businesses operate. And I need to also point out that if you look at our definition of EBITDA, it might not necessarily be the same definition that other companies are using in this sector. I think I’ve covered the question.

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [21]

——————————————————————————–

Well, maybe 1 thing to add for you, Mark. 60% of the cost is in staff and the rest in other headquarter services. We think we have to invest a little bit more. We’ve always been very lean and mean, we try to remain that. But yes, with the company, as we are today, it should grow, but there, of course, at some point in time, we — it reaches a certain level that is nice. But I think it will be — it will increase a bit.

——————————————————————————–

Operator [22]

——————————————————————————–

And the next question is coming from Miriam Adisa, Morgan Stanley.

——————————————————————————–

Miriam Anuoluwapo Adisa, Morgan Stanley, Research Division – Equity Analyst [23]

——————————————————————————–

3 for me. Firstly, just on delivery. You mentioned that you’ve seen some efficiency on delivery per order. Could you just give a bit more color as to whether that’s coming from increased utilization rates or reduction in cost per order?

Then secondly, on the marketing spend, if you could give us a sense of the quantum of the investment that you delayed because of coronavirus and how much of that is moving into the second half? And any color on what marketing could look like in the second half would be helpful.

And then finally, just on pricing. So I think previously, you had mentioned that you’re planning to reduce delivery fees in London. Just wondering if that’s still the case? And if there are any other markets where Just Eat was not price investive? I know you said your logistics business is cheaper than peers, but I guess for Just Eat, that wasn’t necessarily the case. So just wondering if there are any other key markets that you’re planning on rolling out a similar strategy?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [24]

——————————————————————————–

All right. Thank you. Regarding the pricing, well, we grow because consumers like us. So — and probably part of the reason that they like us is because we’re cheaper than everybody else. So we’ll certainly look at providing the most economical way for people to order food, whether that’s with marketplace restaurants or logistical restaurants. That is the same across all the countries. So if it’s high currently with Just Eat in certain places, it will probably be lower. But again, I don’t know how high or low Just Eat is in certain places. But at least we should always be the most economical way for customers to order their foods because then I think we’ll be the top choice for consumers.

Regarding the delay in marketing, well, obviously, the delay of Euro 2020, that reduced our marketing quite a bit because actually, it’s not only the tournament and the sponsorship cost, it’s also a lot of PR around it, giveaways of tickets, TV spots, et cetera, et cetera. The more important delay actually was what happened with the coronavirus hitting our markets in the beginning of March. We did not know what to expect from this virus, nobody did. But we are a careful company. We want to be able also to function without any revenue, and maybe that’s a little bit of a dramatic thing to say, but we obviously did not know what will happen with lockdowns across Europe. In the end, of course, there is no country that we are aware of that closed delivery restaurants, but we did not know that in March, right? So we needed to be careful with our marketing expenditure. And also, don’t forget that in the first weekend that the lockdown started to happen in our countries that our revenue dropped to 30%. So you can imagine that also at that point in time, we were not exactly sure what to expect. And we can only be grateful that our revenue went up so much after that period. And therefore, we restarted our marketing again to cope with that. Difficult to quantify that though, but safe to say that the levels, at least in March and April, were quite below what we were used to putting into marketing.

Regarding your questions around utilization and our delivery service, the improvements that you will see in Germany are due to our utilization going up. Now I should not expect miracles from this, but utilization in Germany, you will remember that things got pretty fast in our company that last year, we closed the transaction with Delivery Hero in Germany. And we had to put Foodora and Scoober together. And actually, the result of that was a better drop per hour per driver. But yes, these are human beings. They can go only so fast. So we are quite happy to get where we are. I should point out, though that, that is still a loss-making business. It makes — it’s less loss-making, but it doesn’t make it all of a sudden profitable.

——————————————————————————–

Jörg Gerbig, Just Eat Takeaway.com N.V. – COO & Member of Management Board [25]

——————————————————————————–

And maybe just as a further explanation, since we have everyone employed, we pay them by the hour, and therefore, a higher utilization leads to a lower cost per order, which wouldn’t be the case if you have freelancers because you pay them by the drop. But in our business model, the utilization is very important.

——————————————————————————–

Operator [26]

——————————————————————————–

And the next question is coming from Andrew Ross, Barclays.

——————————————————————————–

Andrew Geoffrey Ross, Barclays Bank PLC, Research Division – Research Analyst [27]

——————————————————————————–

I’ve got 2, both on Brazil. First one’s, dating back to the bid document for Just Eat, you talked about potentially returning some cash from any kind of hypothetical iFood sale. I think you talked around 50% back to shareholders. So hypothetically, if you were to sell Brazil, which it sounds like you might, would the plan still be to return cash and would 50% still be the number? And I guess, would you need to do that before any Grubhub transaction would close? That’s the first question.

And then the second question is to try and dive into the gap between GMV growth and revenue growth for iFood. And I guess some of that is the shift to 1P, and I guess some of it is significantly less discounting. But could you help us unpick that a little bit and perhaps comment on the competitive environment there?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [28]

——————————————————————————–

Sure. Regarding our intentions with the sale of the stake. iFood’s will seems pretty impossible for iFood not to overtake Just Eat Takeaway in terms of orders. So it’s a magnificent business. We regret that we do not control it, and that actually connects to your question about the profitability of that brand. If we would control it, it will be profitable. So I think that is a safe thing for us to say. Reality is that we do not control it, and that means that we have 2 board meetings or something like that on this company on a yearly basis. That is not something we could feel we can contribute to too much. And this is why we said that we would attempt to sell iFood for a fair market value. And that, of course, if you look at this company, it’s 1 of the most valuable assets on this earth in our sector. So it needs to be a decent price. And for that decent price, we will sell it. In case, we’ll sell it, we’ll return 50% to the shareholders, that’s what we announced. Now that can happen with a dividend, but it can also happen, of course, with the buyback program. So there’s 2 options there. It does not need to happen before the close of the Grubhub transaction.

——————————————————————————–

Operator [29]

——————————————————————————–

And the next question is coming from Wim Gille, ABN AMRO.

——————————————————————————–

Wim Gille, ABN AMRO Bank N.V., Research Division – Head of Research & Equity Research Analyst [30]

——————————————————————————–

Yes. I think today’s results basically show how strong the business model is, and the network effects are exactly the reason why everybody lost this business, but there’s also some darker sides to the food delivery industry and the employee’s contractor discussion and the way some of your competitors are treating their carriers are not exactly social or ESG friendly. In particular, yesterday with AB5 in California, but also in many European countries, however Uber lost cases in France, similar cases going on in the U.K. against Uber, but also global in Spain, delivery on the Benelux. So the list is very, very long. Your competitors always claim that they don’t have to pay minimum wage, social security premiums, sick leave and those kind of things and other basic rights for employees because their carriers want to be flexible. I got 2 questions on this. First of all, you’ve been very clear, you will stick to the law and employ your employees in Europe. But what is exactly the difference between the flexibility that your carriers have that other carriers for your competitors don’t have?

And then the second question would be, more specifically in Canada and Australia and New Zealand. You already made it clear, you don’t necessarily want them to be employees if you can basically stick to the law and treat them fairly. But have you seen anything underneath the hood of Just Eat that needs to change in Australia, New Zealand and Canada? And if so, what is going to be the cost of this?

Then I have a follow-up in terms of profitability. Based on the momentum you show in the second quarter versus the first quarter, we can basically calculate that the vast fast majority of your EBITDA was generated in the second quarter. I know there’s a lot of moving parts and there’s a lot of uncertainty around COVID-19, but assume COVID is here to stay for a few more quarters, and is it fair to say that the current level of profitability in the second quarter is sustainable in the coming quarters?

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [31]

——————————————————————————–

Let me first address that profitability comment. If we would not touch the company, then I’m sure that, that will be right if we continue with the current level. We are going to touch the company. We’re going to invest very heavily in the markets that we believe need investments. And we’ve talked about this before. You can think of London, Paris but also entire countries like Canada. Just Eat U.K. is the best business probably on earth in this sector. And therefore, it needs further investments to expand that position rather than, of course, accept that other people take part of their business. So this is why we feel it needs more investment, and we believe that, that will be very beneficial to that business. And of course, also to that magnificent business in Canada that’s growing like crazy. And we always pick growth in, of course, profitable markets over an absolute profit number. Now it may lead to us accidentally creating a lot of EBITDA because if you look at the EBITDA figures in Holland and Germany, we simply cannot invest more in those markets. That’s why you have that EBITDA number. Just Eat in certain markets is not there yet. It might still be very profitable in those markets, that we accept that. But we don’t believe that we have reached the limits of the growth of these brands in particular market. And again, as we said, we would have taken different investment decisions over the last couple of years in certain markets. So there’s a couple of things that we need to correct as a business, and we think that, that will be very beneficial to us in all these markets. There’s 2 things — well, actually, 3 things happening to the business that make it difficult to give an answer to your question. First of all, there is the coronavirus. I’m not a doctor, but I’m going to assume that, that will stick around into at least Q2 next year and potentially get a lot worse. But that’s something that we do not control, fortunately. There are the underlying trends. There’s a lot of things happening in our KPIs that we have never seen before, and all these trends are up. The AOV is up, the order frequency is up, the new user addition is up, you need to take into consideration that our active consumer number went up with 10 million over the last 12 months. That is likely to be bigger than the #2 in Europe, that 10 million figure. So it’s very important to understand how big that increase is. Order frequency went up, churn went down. So there’s a lot of underlying things happening that will strengthen our business, not just during a health crisis, but also for many years. And we said that before today, we’re probably looking at Just Eat Takeaway that should have been in this position in 2021. We are in 2020, and we’re grateful for that, and we’re now going to build further with the company as if we are in 2021. So this is great, and we can only be thankful that we’re in that position.

On top of that, we’re going to invest in the places that matter to us. Those are typically the places where we see most competition. And those are typically the places in the heartland of our best businesses. So the level of return on our investments should be high. It doesn’t mean that we will see that level of return immediately. It doesn’t work that way. Again, we can get a new user, but it will take that new user a couple of orders for the new users to convert into a profit for our business. But at least we know that those users will be profitable because those users are not in Pakistan, they are in the U.K. or they are in France or they are in Italy. They are in place actually in which we have strong businesses. So this is why we are quite comfortable investing in those places. So there’s 3 things going on at the same time. And of course, we also have seasonal trends on top of it. But that makes it difficult for us also to model. We’ve spoken about the things that we would do absent the health crisis, essentially tens of millions of euros of investment in the U.K. We’ve also now found proof of under investment in a couple of other countries. Think of Canada. I mean Canada is growing fantastically, maybe other — another company would say, well, it’s growing really fast, so let’s not invest more money. We are actually doing the opposite. We believe that it can grow faster. So this is why we’re investing money into that business. So all of that’s going on. I know it’s a very complicated answer, but we are doing the things that we feel are going to turn these businesses in better businesses. And that’s more important to us than showing a very high EBITDA number in the second half. You also know that we’re not going to go overboard because we never have gone overboard in our history, and we’re still the same people.

Regarding your question about the darker side, it’s a little bit extreme, but okay, I’ll take it. About logistics, it is our assessment that what our competitors do in Europe is, in most countries, illegal. I also should note that in most countries, the governments are doing little against it. And the opposition is mostly in courts but we also know that how this works in Europe typically because that’s — it takes a long time, but at some point in time, people are going to conclude that these models are not legal. And therefore, our competitors are going to be stuck with quite a hefty bill for the past couple of years. Now we don’t particularly care about that. That’s not our bill, but we do care about not having that bill. And we also care about not having that bill in the future. So for us to be running a healthy company with 1 of the largest logistical — I know we get a lot of questions about logistics. We actually have 1 of the largest logistical networks in Europe. We have 1 of the largest logistical businesses on Earth in Canada. So we don’t dislike logistics, but we want to do it in a decent way. We’re looking at different countries in Just Eat, our assessment’s that on the long term, in Europe, people need to be employed for them to benefit from insurance and social security and all that. We believe that the coronavirus will accelerate the thinking of governments about it because let’s imagine you are a courier, I’ve seen that our competitors then, in case somebody falls ill to the coronavirus are willing to pay for whatever that person was supposed to make in the 2 weeks that he’s supposed to have coronavirus. Well, we all know that if you get coronavirus, it might not end really well with you, and you might end up for months in a hospital. That’s not covered by our competitors. And sorry, that’s not very social. And we are not the company that is going to continue on that path. And we will have to assess how this works on a per country basis.

Now if we look at Europe, we think it’s unfeasible to have freelancers, and we see that all the lawmakers are moving in the direction of an employed model. And that also then means hefty bills for the past and very high bills for the future on already loss-making competitors. So that’s why we feel that this is the way to go for our business. And as I said, we can afford it. So it’s also fine from a business perspective. And also, I need to add our carriers are usually a little bit better educated than freelances because, of course, we can train them. I think that covers your question.

——————————————————————————–

Wim Gille, ABN AMRO Bank N.V., Research Division – Head of Research & Equity Research Analyst [32]

——————————————————————————–

Well, about the flexibility? How flexible?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [33]

——————————————————————————–

Yes. No, that’s nonsense. What is meant by it is that if people get a gross amount in the bank accounts that they’re going to be happier than when they get a net account where taxes are paid. Yes, because the amount is higher until, of course, the same peers find out at the end of the year that they need to pay taxes on it. You need to understand that the churn on carriers is very high. So the likelihood that the carrier is still working for 1 of these companies is very low. So they will get the tax bill after they left the company. So they’re initially very happy with the income. But then, of course, when the authorities ask about the nature of that employment, they realize that they need to pay taxes on top of it. Flexibility is nonsense. There are many ways of organizing that under employment models In most of the countries, there is flexibility. In Germany, for instance, it’s limited to 3 or 4 hours a day, you need to hire somebody for 3 or 4 hours. Well, those are not very long periods of time, and we believe that it’s up to us as a company to provide enough business for those carriers to be working 3 or 4 hours a day.

——————————————————————————–

Operator [34]

——————————————————————————–

And the next question is coming from Robert Joyce, Goldman Sachs.

——————————————————————————–

Robert Joyce, Goldman Sachs Group, Inc., Research Division – Equity Analyst [35]

——————————————————————————–

I got 3. So the first one, just on your comments about expecting strong growth in the second half. Should we infer from this that your — the exit rates in the 6 weeks you’ve seen in the quarter, you’re trading at or above even the order growth rates you saw across your markets in the second quarter?

The second one is just a quick confirmation. Did you say the new cohorts of customers you’re acquiring are actually seeing better reorder and lower churn rates than your previously acquired customers pre-crisis?

And the third one. I just want to get your thoughts. I think the CMA released some documents recently suggesting Deliveroo actually was positive in terms of cash flow and profits in June and May of this year. Does this surprise you? And does this have any impact on your strategy of how to compete with them?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [36]

——————————————————————————–

We are currently looking at the same development as in Q2, to answer your question. Obviously, that’s not a guarantee for the future, but that’s what we’re currently seeing. The — there’s no difference between the new and the old cohorts, all the cohorts are performing better. So old customers, new customers, there’s no difference. They’re all performing better because they’re all stuck at their homes.

Regarding that comment from the CMA, it’s impossible for us to understand whether those are correct. There are some, let’s call it, creative ways of looking at profitability in our sector. And it’s — yes, I mean, you’ll have to ask them.

——————————————————————————–

Robert Joyce, Goldman Sachs Group, Inc., Research Division – Equity Analyst [37]

——————————————————————————–

Happy to hear the answer. But assuming it was correct, would it have any impact on your strategy? Would you accelerate anything to change how you might compete?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [38]

——————————————————————————–

Rob, just between you and I, it cannot be correct because this is the same CMA that told the market they would go bankrupt and then they go to be profitable 1 month later.

——————————————————————————–

Robert Joyce, Goldman Sachs Group, Inc., Research Division – Equity Analyst [39]

——————————————————————————–

Okay. Fair enough. So no change to your strategy based on that?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [40]

——————————————————————————–

We’ve never looked at competition, to be frank with you. Then we would never have gotten to where we are in Germany or even in Holland, if we would have done that.

——————————————————————————–

Operator [41]

——————————————————————————–

And the final question is coming from Silvia Cuneo, Deutsche Bank.

——————————————————————————–

Silvia Cuneo, Deutsche Bank AG, Research Division – Research Analyst [42]

——————————————————————————–

Just 2 quick ones. Just firstly, the follow-up on the logistics topic. Can you maybe talk about what you think is a sustainable gross profit per order for the group compared to the EUR 2.45 reported in the first half, taking into account the growing set of delivery orders and the efficiencies you have achieved in that (inaudible)?

And secondly, you mentioned some cities like London and Paris particularly require investments. Can you please talk about how the competitive environment is evolving in the large cities, just referring to the Uber’s comments from their conference call a few days back. When they said they have secured #1 positions in some larger uncalled cities like London?

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [43]

——————————————————————————–

All right. I will refer your first question to the CFO if he’s inclined to answer. The latter question, yes, we’ve also seen these comments from Uber. To be quite frank with you, we don’t really know where Uber is getting their figures. They are not by any stretch of the imagination the #1 in Brussels, we are. We’re also a little bit surprised that they mentioned Belgium. We are at least 10x bigger than Uber Eats in Belgium. And also, by the way, EBITDA positive to our EBITDA standards. The same is true for Canada. We have no idea how Uber got to that information. According to our information, we’re comfortable #1 in Canada, and quite a bit bigger than Uber Eats. So you would have to ask these guys where they got the information. We’ve looked for a source, it wasn’t on the page. So yes, it’s difficult for us to understand. I think what’s important is that we are in very good shape. And Belgium is 1.5 hours drive from our office. So we know a little bit about that, about the country. And that’s really we made a call to Canada to figure out what this was about, but they also don’t know. So again, you have to ask them.

The margin question for Brent…

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [44]

——————————————————————————–

Yes, the gross profit were — well, as you see, the gross margin for business in first half was at 61% and that results in a gross profit per order of EUR 2.45.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [45]

——————————————————————————–

Your question was a bit like…

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [46]

——————————————————————————–

Well, if you ask for the gross profit of delivery business, yes, well, we don’t provide that as you probably will be aware of.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [47]

——————————————————————————–

It’s very, very negative.

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [48]

——————————————————————————–

But it’s — I wish I could say the same. I mentioned this number to you, but as Jitse is saying, and we all say for a long time, hard to make it look like a positive number.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [49]

——————————————————————————–

You’re talking about Europe, of course, right? In Canada…

——————————————————————————–

Brent Adriaan Wissink, Just Eat Takeaway.com N.V. – CFO & Member of Management Board [50]

——————————————————————————–

Yes. Okay. Sure.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [51]

——————————————————————————–

He’s talking about Europe.

——————————————————————————–

Operator [52]

——————————————————————————–

There are no further questions. Please continue.

——————————————————————————–

Jitse Groen, Just Eat Takeaway.com N.V. – Founder, Chairman of Management Board & CEO [53]

——————————————————————————–

Yes, that concludes today’s call. If you have any further questions, then by all means, contact Joris Wilton. He’ll be able to answer most of your questions. I would appreciate it if not everybody would call every day, that would be great. But we thank you for joining this call. We’re very happy with the results, as you probably have noticed, and we’ll see each other in the future.

——————————————————————————–

Operator [54]

——————————————————————————–

Ladies and gentlemen, this concludes the Just Eat Takeaway.com event call. You may now disconnect your lines. Thank you very much.