Just Eat Takeaway.com NV

AEX:TKWY

Earnings Call Analysis

Just Eat Takeaway's EBITDA Rises, Aiming for Profitability

Just Eat Takeaway.com reported significant growth in the first half of 2023. Northern Europe and the UK & Ireland experienced growth in Gross Transaction Value (GTV), with Northern Europe growing at 4% year-on-year and the UK & Ireland at 3% in constant currency terms. The company's half-year adjusted EBITDA surged by EUR 143 million. Notably, Northern Europe achieved its long-term target of a 5% adjusted EBITDA margin of GTV. The UK & Ireland segment is also moving towards a similar high margin, marking a strong increase to EUR 56 million from a negative EUR 18 million in the previous year. This is part of Just Eat Takeaway's broader ambition to create a highly profitable food delivery business, with a positive free cash flow expected to materialize by mid-2024.

Path to Positive Cash Flow

The company has begun to see the light at the end of the financial tunnel, expecting improvements in cash flow. One notable change comes in the second half of the year when certain payments are projected to cease, ultimately enhancing cash flow going forward. Despite a challenging first half of 2023, with a free cash flow before changes in working capital reaching minus EUR 78 million, this is a dramatic improvement from the minus EUR 407 million in the same period last year. Looking at the company's free cash flow excluding Grubhub marks a further uplift, reaching minus EUR 22 million in the first half of this year.

Strategic Shifts and Delivery Enhancements

Strategically withdrawing from its Scuba operations in the UK has redirected attention towards scaling Delco cooperations, its freelance model. This pivot has led to an upswing in efficiency and profitability. Additionally, the integration of pooling in delivery operations—a feature still not fully implemented across markets—promises to further reduce costs and contribute to the bottom line. These operational enhancements are expected to unlock further potential for cost reduction and, consequently, improve unit economics significantly.

Guidance and Expectations For 2023

In its guidance for the short-term, the company anticipates Gross Transaction Volume (GTV) to fluctuate between a decrease of 4% and an increase of 2% year-on-year for 2023. This points to a gradual return to growth, particularly towards year-end. Free cash flow is expected to turn positive by mid-2024. In terms of profitability, there's an emphasis on achieving a positive adjusted EBITDA, with an estimated EUR 275 million targeted for 2023 despite additional investments and the macroeconomic climate. The positive outlook is tempered by expected currency headwinds, particularly from the dollar, which may influence reported GTV from the second quarter onwards.

Financial Performance First Half of 2023

The company's revenue less fulfillment costs ticked upward by more than 20% in the first half of 2023 compared to the previous year. This spike is attributed to increased marketplace and delivery revenues, even amidst lower order volumes. The total revenue less fulfillment cost reached EUR 1.2 billion, marking a 7% increase year-over-year. With streamlined delivery operations, especially in the UK, the company is prioritizing these financial metrics as it progresses through the year. The adjusted EBITDA showed a substantial improvement of almost EUR 280 million, compared to the previous year. However, the company still reported a net loss of EUR 258 million for the first half of 2023, which, while significant, reflects a decrease from the last year's figures. The losses are considerably attributed to the non-cash amortization of intangibles from major acquisitions, including Just Eat and Grubhub.

Earnings Call Transcript 2023-Q2

[Operator]

Hello and welcome Just Eat Takeaway.com First Half 2023 Results Call. My name is Laura, and I’ll be your coordination for today’s event. Please note this call is being recorded and for the duration of the call your lines will remain on listen-only. [Operator Instructions]

On our corporate website, you can download our press release and the slides for this analyst and investor conference.

And I will now hand you over to your host, Jitse Groen, to begin today's conference. Thank you.

[Jitse Groen, CEO]

Thank you, operator. Good morning, everybody, and welcome to this analyst and investor conference call to discuss the half year 2023 results for Just Eat Takeaway.com. On our corporate website, you can download our press release and the slides for this analyst and investor conference.

Now, while we are all here, let me first start by addressing Brent stepping down for next year's AGM. Brent joined the company when we had 39 people work for us. And I believe that the revenue back then was only a couple of million per year or so. You will see later in this presentation as well. That we now have 15,000 people in offices, almost half a million couriers and that the revenue of the business is over EUR 5 billion. There are not many people that make the same journey in Europe. And there are even fewer that can claim a large part of that success and Brent naturally as well. I very much regret to see Brent leave. He was instrumental in large, well known deals such as the deal with Delivery Hero in Germany, the merger with Just Eat, but also, he arranged the IFA deal last year, which made sure the company is now well capitalized, and generally in any good financial shape.

Running a large business is hard work, which is not always recognized by the outside world. We always say building a business, it's not a sprint, but it is a marathon. Brent will have been here for 30 years and will have run a very long marathon. I, of course, understand that there is life after JET. And I very much understand that there are other avenues and life events to explore. And we are looking forward to the monthly barbecue. We expect he will be organizing for us going forward. I owe you the world Brent. And on behalf of everybody here, I thank you for your service to the company. And I hope that you can always look back with pride at what we have accomplished together.

That having said, Brent would also be the first to conclude that the show must go on. And I am grateful to him that he will stay with us until the next AGM so that we have ample time to find a worthy successor. And this brings me to the start of our presentation.

I would like to take you through the highlights of our performance in the first half of 2023 and how these ties into our ambition to create a highly profitable food delivery business. Jörg Gerbig, our COO and Andrew Kenny, our CCO have prepared a couple of slides regarding our investments in our delivery network, while simultaneously improving our delivery unit economics and our efforts to further enhance our consumer proposition by investing in Northfield adjacencies. Brent Wissink, our CFO will then talk you through our cash position and free cash flow generation, as well as providing additional details of the financial results work level and for each of our operating segments individually.

I will end the presentation with some concluding remarks. After which we will open up the call for your questions. And regarding the question and answer session. As a reminder, we will allow one question from each of the analysts. Before we dive into the details, I would like to set the tone for today's presentation. Now our key messages are that Northern Europe and the UK and Ireland returned to GTV growth in the second quarter of 2023. That our half year adjusted EBITDA improved EUR 143 million that the UK and Ireland are on track to reach similarly high adjusted EBITDA margins as Northern Europe, which was already at our long-term target of 5% of GTV. And then lastly, that we are fast approaching our positive free cash flow target.

If you would, please follow me to slide 6. I like to quickly remind you once again of our objective, which has been consistent since I founded the company back in the year 2000. We aim to build and extend large scale and sustainably profitable positions in our markets, and in the following slides will provide more details to support this objective. Flipping to slide 7, as already explained in our first quarter training updates, the first quarter of the year continue to be affected by the pandemic comparison. The first quarter of last year had that high absolute number of orders due to a resurgence in COVID cases. We are encouraged that Northern Europe and the UK and Ireland returned to GTV growth in the second quarter of 2023. And it is important to understand that these two segments of course represent the majority of our orders.

In Northern Europe, year-on-year GTV growth improves to 4% or 3% at constant currency in the second quarter of 2023, while GTV growth was 0% in the first quarter of 2023. Major markets such as Germany and the Netherlands saw sequential improvement in year-on-year order growth. In the UK and Ireland, year-on-year GTV growth improved to 3% constant currency in the second quarter of 2023, while the comparable GTV growth was minus 1% in the first quarter of 2023. I'd like to highlight those absolute orders and GTV grew sequentially in the second quarter compared with the first quarter of 2023, which is, of course not the normal seasonality pattern. The good results in the second quarter for this segment also means that the first half year GTV growth of both Northern Europe and the UK and Ireland on a constant currency base has been positive. This development gives us confidence that the year-on-year GTVP growth is on a path to recovery post the pandemic.

On slide 8, North America and Southern Europe and ANZ are following the same improving trends, however, they are behind in terms of recovery compared with Northern Europe and the UK and Ireland. When correcting for the significant currency headwinds, both segments did improve year-on-year on GTV growth rates in the second quarter from the first quarter of 2023. And then lastly, in line with our previous guidance, the group's year-on-year GTV growth improved to minus 4% constant currency in the second quarter of 2023 from minus 8% in the first quarter.

Moving to slide 9. On the left hand side, you can see that the half year adjusted EBITDA for the group was EUR 143 million, which is at EUR 277 million improvements compared with the same period in 2022. On the right hand side, the adjusted EBITDA per segment on a half year basis is provided, which clearly indicates that all operating segments materially contributed to our adjusted EBITDA improvement. There's a couple of things I'd like to highlight here. Northern Europe continue to demonstrate strong profit generation with an adjusted EBITDA of EUR 191 million in the first half of 2023. The adjusted EBITDA margin as percentage of GTV was already at our 5% long term target in the first half of 2023, with potential for further improvement going forward. Then secondly, in the UK and Ireland, adjusted EBITDA improved strongly to EUR 56 million in the first half of 2023, which is a significant step up from minus EUR 18 million in the same period last year, resulting in a GTV margin of 1.8%. The segment UK and Ireland is on track to reach a similarly high adjusted EBITDA margin as Northern Europe. And the improvements in the UK are driven by the decrease in cross border of our delivery network. Jörg will talk about how we did this later, and he will also share how we will further improve the UK CPL. To round off the slides, we were adjusted EBITDA positive in three out of the four operating segments in the first half of 2023 representing more than 90, 90% of our total GTV.

Moving to the next slide, we are fast approaching the free cash flow targets to turn positive in mid- 2024. Brent will provide more details on free cash flow generation in his section. But given the importance of this subject, I want to quickly run you through the high level bridge from adjusted EBITDA to free cash flow before changes in working capital. After excluding items of recurrent nature, such as capital expenditures, leases, interest and taxes. The company improved its free cash flow before changes in working capital and non-recurring items to minus EUR 60 million. A careful reader will have noticed that our interest costs have come down significantly as we see an increasing return on our cash position, which has helped predominantly in money market funds. The EUR 62 million of nonrecurring expenses can be divided in two buckets. First, exceptional items amounting to EUR 26 million that we incur to improve our future earnings for instance by restructuring, reorganizing and simplifying our business. And secondly, EUR 36 million related to a Denmark UK tax disputes dating back more than a decade, which was paid in the first half of 2023. This of course predates the acquisition of Just Eat by our company. And you may recall that we received a related payments of EUR 21 million by the end of 2022. And this is the reverse of the payment.

Now naturally, these payments will not be there anymore in the second half of the year further improving our cash flow going forward. This brings us to our free cash flow before changes in working capital, which was minus EUR 78 million in the first half of 2023. And the reason why we exclude changes in working capital is that in online food delivery, the working capital balance mainly relates to restaurant cash, and it can therefore swing significantly. In our case, between plus and minus EUR 100 million, depending on the day of the week that we close the account versus our payment cycle to restaurants which is typically on a weekly basis. Brent will talk about this later as well and if you will now follow me to the next slide.

You will see that this is a significant improvement from minus EUR 407 million in the same period of 2022. On the right hand side, you see that excluding Grubhub, free cash flow before changes in working capital was minus EUR 22 million in the first half of this year.

Now on slide 12, Grubhub with a free cash flow of minus EUR 56 million is also on a path to cash flow breaking. In parallel to actively exploring a partial or full sale of Grubhub, we have initiated a number of measures, which we believe will lead to further improvements going forward. We have appointed a new CEO; we are realizing a US $30 million plus run rate saving from 2024 onwards through a restructuring and we have established a path to freakout free cash flow breakeven at Grubhub even excluding any positive impact of a potential New York City fee cap amendment.

Now on slide 13, we reiterate our short-term guidance, we expect GTV growth to be in a range of minus 4% to plus 2% year-on-year in 2023. And as previously stated, return to growth is expected to be skewed towards the end of the year, given the lower absolute order level of the second half of 2022 versus the first six months of 2022. And please note that this GTV guidance is based on reported GTV which is expected to face a significant headwind from negative currency movements, especially in the dollar from the second quarter onwards. We remain focused on profitability and expect to deliver a positive adjusted EBITDA of approximately EUR 275 million euro in 2023. This guidance includes additional investments in foods and nonfood adjacencies, wage costs inflation and reflection on certain macroeconomic environments. And we expect free cash flow to turn positive by mid-2024.

And with that, I hand over to Jörg.

[Jörg Gerbig, COO]

Thank you, Jitse, and hello, everybody. Over the next couple of slides, I will give you an update on the operational progress we've made across our global delivery offering. We have scaled our delivery substantially in the past few years, and it remains a key part of our future growth story. We are focused on three key pillars to advance the business. First platform consolidation, second, technology improvements and third expansion. First, we are simplifying our delivery model. Earlier this year, we decided to withdraw our Scuba operations in the UK. This move has allowed us to focus on and further scale our Delco cooperations, i.e. our freelance operations in this market. This contributed to improve the efficiencies and profitability. In fact, across all our markets, we continue to sharpen focus on our own models, Scooba our employee model and Delco our freelance model, and therefore reducing further our complexity and dependence on third party providers.

Second, technology advances have been a vital lever and improvements we have made in our delivery operation so far, and will continue to be a focus going forward. Pooling is a feature we have unlocked, and that will further develop, contributing directly to efficiencies and bottom line savings. It's worth calling out that we are yet to deploy the full force of our pooling mechanism. For example, our multi partner pooling feature is yet to be activated across many of our markets, meaning, we still expect significant further upside, which is effective in reducing our cost per order. We also getting better at understanding the impact on food and delivery experience for customers, which remains our top priority.

On efficiencies, we're also improving courier performance to order flows and algorithm optimizations. Meanwhile, our investment and improved courier waiting times will deliver a more seamless experience for all our stakeholders. And third, to further support new and existing consumers, we are investing in the expansion of our delivery network. We are undergoing a targeted expansion in new zones and cities to grow population coverage and enable us to serve more customers in more places where we usually cover almost all the population in a country with marketplace restaurants already. Our delivery coverage still offers potential for expansion in some of our markets, such as Germany, where we are already having by far the largest logistical network. That means that we will actually almost double the population covered with our own delivery offering, maximizing customers choice and partners reach alongside our existing marketplace supply. The increase in coverage and choice leads to further density and scale that will have a positive knock on impact on profitability of the delivery operations.

Speaking of profitability, please follow me to slide 16. Across all our delivery offering, we are focusing on several revenue growth and cost saving levers to enhance unit economics, which remains a strategic priority. From a revenue perspective, we continue refining and optimizing our consumer pricing strategy, including the interplay of service and delivery fee levels, which will be aligned with consumer expectations with the aim to deliver great value to our consumers. At a time of rising inflation, we remain committed to being a very much affordable delivery provider for food and convenience for customers in all of our markets. Elsewhere, growth transaction value has improved through advanced upselling and expansion into new verticals, with a higher average order value, which consequently improves our revenue per order. Andrew will talk about some of these new verticals later on.

On the cost side, the company is undertaking several strategic initiatives to enhance efficiency and optimize expense related to network expansion and service delivery. While expanding the network is crucial, it is equally important to enhance the quality and reliability of the existing coverage. This means we are looking to further reduce delivery times in many of our key cities and improve the interaction with our offering for consumers, partners and couriers. As mentioned earlier, a major driver of our profitability improvements is auto pooling, allowing couriers to deliver multiple orders as part of the same delivery. We've increased pooling rates substantially since beginning of 2022, and continue to see a positive trajectory. Pooling is a significant lever for cost improvements and in H1, we have really just begun to unlock its potential. Significant levers remain to further improve unit economics.

Please turn to slide 17 to zoom into the UK delivery operations. Our strategic improvements have yielded an impressive result, significantly impacting unit economics. In the UK, as we mentioned before, we've been simplifying and consolidating our platforms. Our share of Delco orders increased by 12 percentage points since the beginning of the year through the removal of Scuber and reduce reliance on third party providers. We already achieved a notable 10% reduction in fulfillment costs in the first half of this year, which comes despite inflationary pressure on wages. H1 2023 cost reduction exit rate in June was even at 14% reflecting that most of the positive impact of the simplification is yet to unfold in the second half of the year. Given we are delivering millions of orders per month without delivery service. This reduction translates in 10s of millions of euros in savings only in the UK, and highlights the effectiveness of our efforts and streamlining operations and leveraging technology to improve overall efficiency.

Looking ahead, we remain highly optimistic about the profitability trajectory of our delivery offerings. By leveraging the levers outlined earlier, platform consolidation, technology improvements and expansion. We expect this positive trend to continue in the second half of the year and beyond.

I will now hand over to Andrew who will talk about commercial progress.

[Andrew Kenny, CCO]

Thanks Jörg, and good morning, everybody. Over the next few slides I'm going to talk you through some of the strong commercial progress particularly in grocery but also some of the early learnings we've taken within nonfood which is undoubtedly an area we are excited about for the future. I will also touch on advertising revenue.

Firstly on slide 18, on the encouraging growth we are seeing in our global grocery properties proposition. You can see on the left hand side, we now serve customers with over 40,000 grocery partners, adding over 10,000 new partners, 36% increase since last year. This is made up of national and international chains, 1000s of independent grocery and convenience outlets, as well as the expansion over dark store proposition in Canada and Germany. For example, in Canada in recent months, we kicked off a partnership with Walmart, whose range is stocked out of our own fulfillment centers, SKIP Express Lanes. These customers in initial cities such as Vancouver and Edmonton can place their Walmart now orders directly through our platform with delivery in under 30 minutes. And the initial results have been very encouraging. I will come on to the UK in a moment separately, but elsewhere in Europe, where the partnership model by major grocers with aggregators generally is a little less mature than North America and the UK, we've continued to add and expand with other big players on our platform, including more stores with the likes of Dia in Spain, Shell, getir, SPAR and Carrefour right across Europe to name just a few.

Each of these partnerships is progressing well with ongoing and future plans for expansion across numerous markets. It's also important I think to mention that alongside bringing new partners to the platform in this vertical, we continue to invest in improving our product and tech advances in this area. The demands are clearly very different from restaurant and we now have a dedicated product and engineering team to support our ambitions in grocery. And this team has been working on continued changes which are transforming the consumer and partner experience. Some of these product developments are more subtle than behind the scenes while others clearly a customer's in their discovery. This year, we have enabled grocery partners to add more products to their range with better discoverability. That's too easy to navigate grid view categories, all significantly improving conversion on the platform. For partners, we've also made it easier to sign up and on board as grocery providers with development in our integration and onboarding capabilities, image databanks and more dynamic out of stocks to link and a lot more is planned for the month ahead.

Moving to the next slide, I think it's worth spending just a little bit of time focusing on the UK and Ireland segment where we've been particularly pleased with the progress and the momentum we have within this category. Here the number of partners is growing very nicely. It multiplied by more than 5x in the last year and it's up significantly since I last spoke about UK grocery at our full year results back in March. We now have many of the largest brands in the UK from ASDA, Sainsbury's, coop, Iceland, one stop, Nisa, and we're working to expand this offer further over the coming months. Each of these brands has scaled substantially since the start of the year, for example, we've on boarded nearly 1000 coop stores and hundreds of ASDA and Sainsbury's locations. For the priority over the past 12 months was really to get it to a scaled offering, which we have now done, we have a comprehensive national offer that allows us to advertise and really push the vertical more and more aggressively to, or close to 20 million UK customers. This is beginning to translate, you see on the right side into a larger GTV contribution, which has multiplied by more than 13x since our H1 update last year, and we've doubled the number of weekly grocery orders from the start of the year. And we will no doubt talk in more specifics about the broader contribution in future releases as it becomes an even bigger part of the business. Most importantly, perhaps is how the vertical positivity interacts with the core restaurant business as well. And we continue to see encouraging signs that our grocery proposition is a real driver of incrementality and frequency. In fact, we are seeing a notable uplift in order frequency from customers whose first order is within the grocery category. With these customers ordering close to twice as much per month as nongrocery customers.

On the delivery side. Expanding our proposition clearly helps our fleet utilization through higher order densities, allowing for more efficient networking operations and keeping our couriers busy even away from mealtime peaks. So overall, the journey continues at full speed through 2023. And we're pleased with the progress across the category.

Now on the next slide, I just want to talk very briefly about some early but exciting steps we're taking within new verticals in nonfood. We're very clear that there is a significant opportunity for expansion into adjacent nonfood and retail verticals over the coming years, leveraging our millions of customers and importantly our extensive logistic network to serve even more consumer needs, and essentially to cater for more on demand convenience type elements. We've already launched with partners in multiple nonfood verticals including electronics and pharmaceuticals, Media Markt for example, the number one European consumer electronics retailer. This partnership allows you to purchase anything from headphones to a games console, often in as little as 30 minutes. With products from the likes of Nintendo, Microsoft, Apple, many more.

In pharmacy, our first pilot in Europe was launched in April in Spain. This is proving successful with increasing orders, new customers, and a strong average transaction value. So this is, of course, just the beginning. Earlier this month, we also added LUSH, one of the most popular European cosmetic black players to our platform, with many more partners across various retail categories expected to follow in the quarters ahead. So very early days in these adjacent verticals, but as we continue to work closely with our partners to take learnings from these initial trials, we will continue to add more retailers and convenience specialists in the quarter that I know that talk more about it in the future.

On the final slide of this section, I'll just briefly talk about our progress and plans for our advertising platform. Advertising has been a feature of our business for quite some time. But we do see significant opportunities for continued growth in this area. This high margin revenue stream was almost EUR 100 million in the latest half. So analyzing close to EUR 200 million run race. This 33% increase in the current half versus H1 of last year is driven predominantly by higher penetration of our advertising products with our partners, which feels increased demand. It's important to note also actually that these numbers exclude Grubhub whose pricing model for advertising is different and it's part of more of a tiered commission structure. So they too have powerful tools in place to maximize our platform advertising. So essentially today, our current advertising revenue comes predominantly from promoted placement, which enables us to work with restaurants and grocery partners to enhance their visibility on our platforms. This generates incremental demand with a proven higher return on their spend. And as you can see on the right hand side, through our self-service platform, our partners can choose how much they're spending with us and how to set spending cost, et cetera. Additionally, we're working with FMCGs and major brands such as Unilever, Heineken, Red, and Red Bull, among others who are looking to further utilize our app and website to promote relevant products to customers. So there's a lot more we are working on in this space. And clearly with grocery and nonfood verticals, a lot more opportunities open up also. It is critical, however, that we do this in the right way and that it not only supports a strong customer experience, but also generate a strong ROI for our partners. So we will be careful but overall, we consider this to be a pretty nice scenario still nascent areas still and one we are confident that we can continue to grow in a meaningful way in the coming years.

I'll now hand over to Brent who will talk through the H1 progress we made across our [inaudible].

[Brent Wissink, CFO]

Thank you, Andrew and good morning, everyone. Before I take you through our financials, I want to come back on my decision to step down as CFO and resigned from the JET managing board, as per the annual meeting in May next year. It has been a very tough decision after so many years. But I believe it's a time to consider other opportunities. I am very proud that I have had the opportunity to contribute to success. And it has been an honor and a privilege that I have. I could have been part of the Just Eat journey. I can think I can take a lot of colleagues which I will certainly do in the next nine months, but I stay committed until the last day.

Now I will start with the key financial metrics for the first half of this year. Jitse today explain the sections, all section quarters and GTV year-on-year trends improve across whole segments in Q2, with GTV returning to a year-over-year growth in Northern Europe and UK and Ireland. Nevertheless, [inaudible] GTV in the first half 2023 compared with first half 2022 were down due to the impact of the pandemic on these metrics in 2022, which is also reflected in the revenue developments in the first half of this year. We are particularly pleased with the progress we made in the profitability during the first half of ‘23. The investments we've made in our technology, order supply and delivery network, as well as our focus on optimizing spent below burn costs drove to sustainable gains in adjusted EBITDA.

Please move to the next slide where we highlight the improvements for revenue less fulfillment costs. Revenue less fulfillment cost is a key metric for our business. By continuing to improve our unit economics, we can achieve a net generating, cash generating business in the coming years. In the first half of ‘23, our revenue less fulfillment costs for orders increased by more than 20% compared with H1 last year. The improvements came from both marketplace and delivery, and from both revenue and cost levers. As a result, in the first half of ‘23, we generated EUR 1.2 billion of revenue less fulfilment cost to 7% increase compared with the last year despite lower order volumes. The biggest driver for the improvements was the increased profitability of our delivery operations across most markets, with the most notable gains achieved in the UK, as mentioned by here earlier further optimizations, and improvements in revenue less fulfillment cost is a key focus for the remainder of 2023 and beyond.

On the next slide, we see the contribution of each segment to EUR 143 million of adjusted EBITDA in H1 2023, which is almost EUR 280 million improvements compared to the same period last year. We are very pleased that each segments demonstrated a significant step up in profitability and the overall improvement in adjusted EBITDA.

Moving to the next slide, where we showed the bridge between adjusted EBITDA and high risk net loss for the period. The net loss for the first year of 2023 was EUR 258 million, which is significantly reduction compared to the same period last year. The largest driver of this net loss position is the amortization of intangibles on the equity funded acquisitions of Just Eat and Grubhub. These amortizations are all non-cash items.

On the next slide, we bridge H1 2023 adjusted EBITDA to free cash flow. We have seen significant improvement in our cash generating, driven mainly by improved cash flow items within free cash flow before change in working capital and nonrecurring expense. Given the nature of our working capital cycle, where we see the growth transaction value ahead of paying our partners working capital cash flows are posted overtime, which are subject to volatility based on current rate. This volatility is just a technical movement. Based on which day of the week the period ends and does not impact our operations. We, therefore consider free cash flow both excluding working capital to give a better view of underlying performance. The nonrecurring items of EUR 82 million are related to the cash flows from the settlements over tax matter and other exceptional items. The tax settlement was EUR 36 million. And as we said, it relates to tax disputes between the Dennis and the UK tax authorities that goes back to 2012 and has now finally been resolved.

The other exceptional items may relate to one restructuring costs for acquisition part of our UK delivery business to the independent contractor model. To be clear, the cost here related to redundancy costs and the costs of shutting down facilities, no operational losses, and two, to initial thoughts connected with restructuring and cost reduction program in the US. If we exclude the exceptional nonrecurring items and the working capital movements, given they do not reflect underlying cash generation, we saw that our core activities were delivering minus EUR 60 million in the first half of ‘23.

Please follow me to the next slide where I want to provide you with insight into cash flow connected to our US business. This business has an oversize contribution and cash flows below adjusted EBITDA. In the first half of this year, we achieved a free cash flow before nonrecurring expenses and working capital movements of minus EUR 47 million which is a material improvement compared to the same period last year, as Jitse also presented in his section. As we continue to grow the adjusted EBITDA of the US business as well as optimizing our cash flow items. We expect that this trend -- this will trend towards positive cash flow in the future.

Now to the next slide, where we show our cash flows should Grubhub has been excluded from the group, here we show you that cash flow before working capital movements and nonrecurring expenses would have been over EUR 30 million plus including those nonrecurring expenses to cash flow is slightly negative and minus EUR 22 million. As Grubhub continues to improve with cash flows, the whole group is well on track for the cash flow. Before where we kept the [inaudible] posted by mid-2024.

Please follow me to the next slide where we show our liquidity and debt maturity profile, we have made well finance to execute our product to free cash flow generation. Our debt maturity profile is very manageable based on our current cash position and our progress towards cash flow generation. With this strength allows us to make optimal long-term decisions both operationally and with our capital structure.

In terms of a capital structure, we continue to consider our capital allocations options, including share buybacks, we will take action to capture value through compelling opportunity arise after considering all factors rather than factors include return on the current cash holdings, very to very low coupon to be based on the shorter status bonds and managing the maturity profile to maintain strong liquidity is also considered against the strong return we expect from buyback our shares at current prices.

Let's move to the next slide. As announced at our Q1 trading update in April, we initiated the share buyback program up to EUR 150 million to improve future earnings per share. We were able to take this action as a result of our strong balance sheet and the increased visibility on free cash flow generation. The repurchase shares will be used to cover the company's obligations and the share based compensation arrangements or will be cancelled to reduce issued share capital. Up to an including 21st July, we have deployed approximately EUR 86 million to buy back 2.7% of our issues shares.

Please turn to the next slide where we look into each segment in more detail. North America returns to post adjusted EBITDA in the first half of 2023 despite the ongoing headwinds due segment profitability from free cap in New York City. Even though our revenue declined due to direct reduced volume, we did significant improvements in segment profitability due to a more efficient delivery network to increase pooling and focus management on our operating expenses. In particular, in June, we announced a restructuring program, resulting in a 50% reduction of Grubhub headcount with 400 impacted. The Amazon partnership we entered into last year was extended for another year, which was trailing Grubhub competitiveness and represents a significant opportunity for future growth.

Turning to the next slide, in Northern Europe we grow GTV while increasing profits, GTV increased by 2% and revenue by 10% on a year-over-year basis, adjusted EBITDA improve year-on-year by more than 50% reaching EUR 191 million in the first half of 2023. The adjusted EBITDA margin in the first half of 2023 was 5%, which means the segment has reached our long- term adjusted EBITDA margin target, and we believe there is potential for further improvements. In short, we believe this remains the highest margin food delivery segment in the industry.

On the next slide, we outlined the performance of the UK and Ireland, for the first half of 2023, UK and Ireland increase GTV by 1% on a constant currency basis, compared to the same period last year, the UK and Ireland significantly improved their adjusted EBITDA to EUR 56 million in the first half with a positive adjusted EBITDA margin of 1.8%. The improvement was driven by, mostly driven by the improvements of delivery unit economics, as Jörg was also explaining earlier. We are very pleased with the progress made in the UK and Ireland's profitability with its margin on track to reach those seen also in our Northern European segments.

The next slide shows the performance of Southern Europe and ANZ, this segment compared to many of our lessen served markets where we are making confident steps from our cost to profitability. There is particular focus on improving unit economics in this segment. I would also like to call out Australia, which is now delivering positive revenue less fulfillment costs, which has been a focus of investment for the last few years. Adjusted EBITDA losses decreased by 50% in the first half of 2023, compared to the same period last year.

My last slide covered that focus both such as stock and price expenses, to support these, that focus, [inaudible] days decrease on a year-on-year basis, which was also being, could also be seen last year in the second half of last year. At almost cost expenses decreased by 6% compared with the second half of 2022 due to significant -- due to inflation related to cost adjustments and some positive phasing impact in H2 2022. We remain focused on discipline and focus expenses in the second half of 2023.

And with this, I will hand over to Jitse for the conclusion of this presentation.

[Jitse Groen, CEO]

Thank you very much, Brent. I will continue with the wrap up of this presentation on slide 39. Northern Europe and the UK and Ireland returned to GTV growth in the second quarter of 2023. and a half year adjusted EBITDA close to EUR 143 million, UK and Ireland are on track to lead similarly high adjusted EBITDA margin as Northern Europe, which already was at our long- term target of 5% of GTV. We significantly improve free cash flow before change in working capital in the first half of 2023. And we are fast approaching a positive free cash flow target. And to conclude our ambition to create a highly profitable food delivery business is firmly on track.

And with that, operator, I would like to open up the call for questions.

[Operator]

[Operator Instructions]

We'll take our first question from Silvia at Deutsche Bank.

[Unidentified Analyst]

Thanks. Good morning, everyone. And congratulations on the results. I'm going to ask one question on current trading, if possible, since the growth trends sequentially improved in Q2 versus Q1, can you please comment about the exit rate in June similarly to what you did for marks at the time of the Q1 update in terms of [inaudible] and TTC growth, if possible? Thank you.

[Jitse Groen, CEO]

No, well generally, we do not comment on exit rates. We've given you obviously the GTV target for the year, which is very much in reach for us. We've also gave the comments that we had win some currency in the US. And we gave you of course the growth numbers for the different segments. We are quite pleased that Northern Europe and UK and Ireland actually grew in GTV if you look at the first half of the year, because I think it's important to remember that we came out of a pandemic. I know a lot of people look at cost of living prices et cetera. But I think it's important to understand that this is a comparison still is a period in which people could not leave their houses or actually were reluctant to leave their houses because there was an ongoing pandemic. So actually, I was trading up from that situation. I think it's a very encouraging sign to us. Now we are aware of course that North America and Southern European, ANZ have a long way to go. The lockdowns also last a bit longer in those areas. And actually in most of the countries.

But generally, I think we're in a good situation, the target seemed very much in reach, and of course going to try our best to outperform as well. So I think that's the only comment I can get from current trading.

[Operator]

Thank you. I will move on to our next question from [inaudible] at HSBC.

[Unidentified Analyst]

Yes, good morning. Thanks for the opportunity to ask the question. Just a general one on the progress with respect to the current portfolio. I know there's been no deal announced at the Grubhub one or the talks at least have been going on for a while. Maybe there's any sort of comment you can give as to where we stand? I don't know. To be honest, I'll take anything. I'm just happy to hear your thoughts on where we stand.

[Jitse Groen, CEO]

Yes, as we already described, it's complicated. environments. I think we need to separate the state of the business which actually as far we are entitled to comment on it actually quite good. Our business is progressing well. We're not faced with similar challenges that other businesses might face in the business. We don't have a debt that we can't afford. We don't have high interest payments; we don't have any sort of financing issue. So we're actually in a very comfortable position in which we can increase our investments. So that actually is good. If you look at the environment does, still very little M&A going on, the US. situation seems to improve a bit if you look at it from an M&A perspective but also from a valuation of US businesses. So I think that's encouraging. We do talk to people around Grubhub. So there are conversations ongoing.

Unfortunately, these are complicated conversations. Still also, because the fee caps are still in place that makes it very tough to put to decent multiple on Grubhub because the swing factor is so dramatic. And in the meantime, as we have explained, we are improving that business because we don't believe it should be a drag on our overall company, you've seen of course a difference in CapEx levels between the companies. But you've all seen the difference in in EBITDA. So making encouraging progress there, we are reducing the cash burn to zero. And in the meantime, we have ongoing discussions with interested parties.

[Unidentified Analyst]

I appreciate it. I also appreciate the incremental color on Grubhub to say that, is there anything more you can say on the fee cap still? Now that you mentioned it so that's not part of my one question.

[Jitse Groen, CEO]

The fee cap with, there's two processes running there. There's a legacy authority in the New York City Council, as you probably know, we don't control the New York City Council. That's pretty obvious. The second part is still an ongoing court case that also is there, we're pretty confident that they will roll off. We just don't know when and the US it could happen overnight, it could also take a long time still. So we are improving the business. And if the fee caps roll off great, then the profitability profile, Grubhub starts to look like the rest of the business. That's fantastic. But it's difficult to control things that we don't control.

[Operator]

Thank you. And we'll take our third question from Miriam Adisa at Morgan Stanley.

[Miriam Adisa, Morgan Stanley]

Great, morning, everyone. Thanks for taking my question. And just on the EBITDA guidance. Just wondering why you haven't raised your guidance or given you're clearly tracking ahead. And I think previously, you'd said that second half EBITDA would be stronger than the first half, so just wondering where that additional investment is going into in the second half, or are you just simply being conservative? Thanks.

[Jitse Groen, CEO]

Thanks, Miriam. Very good question. There's a couple of things obviously, going on. Yes, indeed, we're doing quite well. And our EBITDA is probably ahead of the markets expectations. We are doing two things presently, we are increasing our investments, and we are increasing our EBITDA. And I think that's a balance that we need to strike, we want to be absolutely the best business in the sector. But we also need to grow. And this is why we're making the investments in an expansion of our logistics network, you've seen probably a lot of announcements in countries in which you will see lesser cities being announced as delivery cities, the smaller cities in Denmark, the smaller cities, in Belgium, additional cities in Holland, we are also expanding our footprint in city. So for instance, where we would cover basically the urbanized part of water dam, then we would venture off in the suburbs, the harbors, et cetera. We think those are important expansions for us to make also because we're delivering other things.

And we are also of course as a Europe, and Andrew alluded to as well, we're investing in technology, because you would understand that, foods have the tendency to get colds, iPhone cables don't get cold, groceries, usually don't get cold. So we also need to invest in technology to make sure that when we pool, we pool the right thing we don't pool, we don't deliver to McDonald's order late, we deliver as a second delivery the iPhone cable, as an example. So we're making loads of investments, our target to be clear is approximately 275. It is not 275. It's approximately 275. So it could indeed be a bit higher. But we also don't know what's going to happen in the second half. So we're making all these investments that should get us additional growth. I think one of the things that you need to take from this presentation is that we significantly reduced our operating costs. Our CPO drops, and of course, if you then start growing also your conversion into profits increases, especially of course, in segments that are already highly profitable. So we focus also on the increasing our growth base, and I think that’s enough information.

[Operator]

Thank you. And we'll move on to our next question from Andrew Ross at Barclays.

[Andrew Ross, Barclays]

Great, good morning, everyone, my question is back to Grubhub. And to press a bit harder on the past for essentially breakeven, should the fee cap amendments not go your way? Can you talk a bit more about the levers you have to do that? Obviously, there's a headcount reduction, but as part of the answer, but what are the other puts and takes and how you get that and perhaps talk a bit about kind of geographic footprint and maybe becoming a bit more focused on the Northeast? And as part of the answer, can you give us a sense of timing as to how long it might take to get free cash flow zero? Should you not get the fee cap? Thanks.

[Jitse Groen, CEO]

Good question, I think you will probably conclude that we have done a lot of work on this in the legacy JET, obviously, Grubhub for sale, and therefore we did not make the same changes in Grubhub in terms of looking at where to cut costs, or where to improve technology, et cetera. There's quite some progress in the logistical network across the US. So actually, that is a more efficient logistical network already. But the changes that we've made thus far, we're actually limited to legacy JET. And we're especially focused now on making such similar changes in the US. And that should lead to a rapid decrease of the burn of Grubhub, now, I'm not going to tell you exactly when that's going to be but you've seen the progress in the last year. That is good progress. And don't forget, this business actually shrank. So actually making that progress with a shrinking business, whether that's the entire business, or the US business is actually quite remarkable. And, of course, we're not counting on this business to continue to shrink. So also you can assume that when businesses start growing again, it also is quite rewarding for us.

So we're making those changes. Sometimes they're painful, like with the reduction of the staff, but they are necessary for that business. And is obviously very unfortunate that the fee caps are there, they make no sense and they need to go. But in the meantime, you also need to run a business. And now we've always believed it's the first slide of our presentation that food delivery businesses should be highly profitable. When they're not that's a problem.

[Operator]

Thank you, and we'll move on to our next question from Monique Pollard at Citi.

[Monique Pollard, Citi]

Good morning, everyone. A question for Brent, please. Just on the CapEx. And CapEx in the first half was just EUR 81 million. Obviously, that's versus last year EUR 320 million for the year. I know, you talked about the CapEx being a bit lower in 2023. But just trying to understand is 1H H the run rate or is there some timing in there? That means the 2H CapEx should be larger?

[Brent Wissink, CFO]

Well, you would say we already said at the annual earnings call that CapEx should be less than what last year. We expect the CapEx for the second half to be a bit higher than it is in the first half. I think that answers your question.

[Jitse Groen, CEO]

But I think it's also comment on that there's a couple of moving pieces. Obviously, you would expect EBITDA to go up.

[Brent Wissink, CFO]

CapEx to be slightly higher in the second half, taxes to be slightly higher. And I think we've all these pieces probably come to a conclusion that the cash flows are improving.

[Monique Pollard, Citi]

Yes, and I think you did mention again this statement, the negative EUR 200 million free cash flow free working capital for FY23. You just reiterated mid-2024, positive free cash flow for your working capital.

[Brent Wissink, CFO]

Yes, but I think if you just extrapolate, and you guys are always much better at that than we are, you'll probably get to roughly the cash burn in second half.

[Operator]

Thank you, and we'll move on to our next question from Andrew Gwynn at BNP Paribas.

[Andrew Gwynn, BNP Paribas]

Yes, good morning, team. Just digging into the order momentum, I guess it's still relatively subdued if we're looking sequentially, so not necessarily looking year-on-year but sequentially. So what do you think the drivers of that are? Do you think there is a cost of living pressure in there? Do you think some of the focus on profitability has weighed on the order momentum? Thank you very much.

[Jörg Gerbig, COO]

I think it's important to understand that we came out of a pandemic and as a result of coming out of the pandemic, you have less users than during a pandemic. And that's why we have to step down in our markets. The markets behave as how they were behaving before the pandemic or during the pandemic. And therefore those markets should grow again. And the cost of living prices, I know that everybody in the UK is talking about that is not really topic in continental Europe. And on top of it, there's not really a lot of difference between the behavior of, let's say, the Continental, the Northern European segment, and the UK and Ireland segment, even if you look at food prices, et cetera, let's call that the inflation or the increase of our ticket sizes, they are similar. So there's not a big difference between two segments. So these segments for us, they actually looking quite good without we cannot measure any sort of different behavior from our consumers, we see that the amount of orders from our consumers is still high. So actually quite hopeful about basically the progress of both sides.

[Andrew Gwynn, BNP Paribas]

I just wanted the balance of the order growth that you're seeing. Could you just talk about the split between say traditional marketplace, the QSR volume and maybe grocery as well? Are we seeing a decent quality to where we are seeing some order growth?

[Jitse Groen, CEO]

Yes, look, I mean, it's roughly the same sort of profile, obviously, when we add more grocery, we can see an increase of the logistics share as a result of it, which is good, because that's additional growth to our business. And same time, we can see that in the figures, obviously, we're becoming much better at logistics, and therefore actually it is a good development for us to be investing in additional logistic share. Also, because the adjacencies, for us are quite interesting, because the margin on of course, food delivery, is very low, but you have a lot of volume, and you might have less volume in adjacencies. But the margins are much higher, for instance, for one of the popular items that we are selling for Media Markt in Germany is a PlayStation controller. So obviously, you would understand that there's a high margin on the PlayStation controller that doesn't exist for pizza,

[Andrew Gwynn, BNP Paribas]

An emergency purchase. But yeah, thanks so much.

[Operator]

Thank you, and we'll take our next question from Lisa Yang, at Goldman Sachs.

[Lisa Yang, Goldman Sachs]

Hi. Good morning. I was just thinking if could elaborate may be on the recent market share trends. So improvement we're seeing for Q2, and [inaudible] for the market related [inaudible] as opposed to maybe market share change and any color as well, on the broader competitive landscape? Have you seen any changes recently, any step up competition that could potentially could lead to maybe be a little bit more conservative on that H2 EBITDA guide? Thank you.

[Jitse Groen, CEO]

Thank you, let me comment on the second question, because I did not catch the first one. But we'll get to the first one. But I'll get to the first one after that. So regarding competition, what we currently see is that, especially in smaller countries, or countries in which and countries also in which we are quite large, we have less competition, whether that's parties leaving our country's fast grocery delivery players investing less in their business, or less loitering from, let's say, the major international players we've seen market share grow even in countries like Holland, which will be a bit strange, of course, given we already have such a large portion of the market, but in Holland, Switzerland, Belgium are doing fantastically well. So those sorts of countries, actually a lot, not only, a lot less competitive pressure, the competitive pressure in countries such as the UK, still high, same thing for Canada and US. But actually for us, given that we are in most cases also in countries like Switzerland, quite profitable, that's actually quite beneficial to us because it allows us to invest more money, for instance, in the UK. So that's good. We still believe that all these food delivery businesses, they need to show that their cash flows are improving that will be very hard for a lot of our competitors. And therefore we do expect some less competitive pressure going forward. And could you repeat your first question?

[Lisa Yang, Goldman Sachs]

Yes, just complete the improvement in Q2, in the series of order trends, was that some extent to your market share, improving or stabilizing or underlying market being a bit better?

[Jitse Groen, CEO]

Okay, well, first off, I think especially in Northern Europe, our competitors are actually quite small. Right? So I think even talking about market share would not be very appropriate because we're talking about such small shifts. And actually, as I said, in most countries, actually, that's moving in our favor and not the other way around. Then in the UK and Ireland, it's very difficult, I think you're always looking at a mixed picture. When we added McDonald's, we grew a lot and our GTV went down, you see the same thing now happening to a competitor. So that's not to say, huge market share gains, it's just adding a very interesting food delivery van to your business. Overall, I think it's also a bit of the difference, the wrong the wrong discussion. In the end, it's about creating large, profitable businesses. And for large profitable businesses, you need scale. So if you look, for instance, at the UK, it is the largest food delivery business in Europe and therefore it has scale. And that's the reason it will become highly profitable for us also, because we have such a large marketplace business in the UK, as well. I think that's the thing to look at quality of the business not at whether you're going to between Q1 and Q2 going to have a 1% share gain, because if that 1% share is not going to be profitable, then what are you doing, because it's pretty obvious that food delivery needs to grow up, and it should generate profits. And there was a time which money was free, and we could always invest in growth of our business. That time is now behind us. And it's time for us to show people that our businesses can be profitable. And that's what we're currently competing with, all that talk about, oh they lost or gained, what 5% market share. While you're already by far the largest food delivery business in Europe, just in the UK, I think it's a nonsensical discussion.

[Lisa Yang, Goldman Sachs]

What about Southern Europe, do you have comments there, because the trends are still declining further.

[Jitse Groen, CEO]

Sorry what?

[Lisa Yang, Goldman Sachs]

In Southern Europe, could you also comment on what's going on there?

[Jitse Groen, CEO]

Yes, so first of all, I understand there's a lot of focus on it. But I think it's important that it's a tiny segment for us. I mean, I've big segments out of the three other ones. In Southern Europe. Obviously, these businesses are subscale. We've already said that, for instance, Australia actually is not subscale, is a large business actually, and the profitability is improving quite a lot there. Southern Europe, we need to keep on investing because they are subscale and subscale food delivery business will not be profitable. So they need to be actually larger. We are facing, of course, competitors that don't follow the law. And that's very convenient, because you put the fines below EBITDA, right, it's not included. But these fines need to be paid, because it's the law. So we're actually quite confident that going forward, there will be a change in competitive pressure in Southern Europe as a result of that.

But as I said, this is not the lion's share of our business, lion's share of our businesses in Northern Europe plus the UK and Ireland.

[Operator]

Thank you. And we'll take our next question from Giles Thorne at Jefferies.

[Giles Thorne, Jefferies]

Thank you. And the question on UK stuff, the scale you're getting in grocery of strategy. And logic is now building for a launch of a construction program in Europe and have a dedicated FMCG advertising platform. It would just be interesting to hear your latest thoughts on those two things. Thanks.

[Jitse Groen, CEO]

Yes, so I mean, subscription is something that we are investigating. But I think it's the logic is not building in Continental Europe, because most of our competitors don't have scale. So who are you're offering the subscription model to? So I don't think that's going to move the needle too much for anybody. In our case, we've launched the subscription model in Canada, you've probably picked up on that. It's something that we are investigating for other places. I think it is important to understand that especially in the US, but also in Canada. Basically, the costs are shifting to service fees. So yes, you have no delivery fees because of your subscription program, but you do have service fees, and I think everybody in North America would recognize that situation. So it is something that can move, of course or can lock in your customers if you have a lot of them and we do have a lot of customers. And that's why we think it's interesting. It is going to materially shifts and market share in Continental Europe now.

[Giles Thorne, Jefferies]

Thank you. And on FMCG advertising platform.

[Jitse Groen, CEO]

Yes, look, we have dealt with deals with the Unilever's and the Heinekens of this world. So we're doing a fair share in that. We're expanding the advertisement possibilities that we have maybes picked up on our logos and images in our app moving. So that's something that obviously is also a sort of advertisement that we have. So there's quite a lot of people on the topic, and we're increasing this revenue stream. It is part of the rest of the business, obviously. So it's something that we've now disclosed so that people can form some sort of opinion on whether that's going in the right direction. But that's interesting for us going forward.

[Operator]

Thank you. And we'll move on to our next question from Sridhar at UBS.

[Unidentified Analyst]

Hi, good morning. Can I just talk about the UK and Ireland margin comment you made it, Jitse you mentioned a couple of times. It's on track to reach a similarly high adjusted EBITDA margin as high as Northern Europe, very different markets. And you also just maintain that it remains very competitive in the UK. What's your confidence? What's driving your confidence? And what are the metrics that you see as helping you. And you talked about it in terms of optimizing the delivery network and things like that. What else is that there is still a very big gap between where Northern Europeans and where UK is currently, so big gap to close. So just help us through that please.

[Jitse Groen, CEO]

You could say it's a big gap. But we improved roughly that gap in one year. So first of all, UK is an interesting case. So we have a large, very profitable marketplace business. So that's already generating quite a lot of profits, those profits, we've reinvested in building up a logistics network. Now, UK is a very special case in which we were running three different models. We're running two different models now. But we're running two different models since June. On top of it, we are improving the Delco model, which is our freelance model. Now, we do a lot of logistical orders. And to be quite frank with you, we were very good at skating, it we were not very good at efficiency two years ago, we are getting much better at it. And that's why actually you see now the UK increase the profitability quite a lot. And it is a business that is far larger than our German business. People sometimes forget about the scale of the UK, but it's a far larger business. And you see the improvements of the margin already in one year. You've listened to Jörg as well. We are making very significant progress in the logistics network. For instance, North, our restaurant pooling, that sort of thing. We did not have pooling last year, for instance, in the UK, there's all sorts of things that we can improve there. There's the density issue, there's replacement of these models locally, because obviously if you go from an employed model to a freelance model, there's a big cost benefit there. So there's loads of things that we're doing on the cost side, and it allows us and I think that's the great news. I mean, you're looking at an EBITDA number, we are also investing more money in the UK, maybe you might not have picked up on that one. But we are also increasing our investment. So also our competitive position increases, because we have a more efficient delivery network.

[Unidentified Analyst]

Got you. Where are you investing in what exactly are you doing there in terms of your investment?

[Jitse Groen, CEO]

In the UK? In particular.

[Unidentified Analyst]

In the UK, yes.

[Jitse Groen, CEO]

Well, we are spending, you probably if you watch TV, you can probably see a lot of JET, we're investing a lot in our marketing in the expansion of our network in grocery other adjacencies et cetera. We're just becoming a more powerful brands, because we're becoming a more efficient delivery player. Well, obviously not our entire business in the UK is delivery to a large part of the business. But it is a large part of the costs. Well, if we reduce that cost, we have more money left to invest in the UK.

[Operator]

Thank you. We will take our next question from William Woods at Bernstein.

[William Woods, Bernstein]

Good morning. Can I just come back to take rates and the progression over the last year, it looks like they've come down in all regions apart from Northern Europe with revenue growth behind GTV, what's driving this? Is this the shift back into marketplace in some regions away from delivery? Or you think pressure from restaurants or mix of QSR? What's driving the take rate decrease? Thanks.

[Jitse Groen, CEO]

I think the take rate decrease will be a mixed effect. I'm looking around the table now. But that should be a mix effects. Very slight tickle.

[William Woods, Bernstein]

Yes. Sorry. It makes sense of all of the marketplace, restaurants, QSR fees, all that kind of thing.

[Jitse Groen, CEO]

Yes.

[Operator]

Thank you. And we'll move on to our next question from Wim Gille at ABN AMRO.

[Wim Gille, ABN AMRO]

Yes, very good morning. I saw in the slideshow that the UK Delco’s share of total food delivery orders, sorry, total delivery orders is now 67%. But as I'm aware, you are also still in the process to actually replace Stuart with the Delco model. So what's the gross profit or uplift if you in percentage of GTV if we move from Stuart to the Delco model in the UK? And also what percentage of the delivery orders was still done through Stuart in the first half of 2023? And in relation to that question, how fast can you actually improve profitability in UK and Ireland to catch up with the Northern European profitability?

[Jitse Groen, CEO]

Yes, that is a complicated question. And I'm not going to give you a complicated answer. Because if you look at the 67%, and now I need to check, that's probably still also Scuber in there. And there is indeed Stuart in there as well. And there's multiple movements. So first off, our own logistical network, and that's a global change is globally becoming more efficient, because we are introducing things like motor restaurant pooling, high pooling percentages, better estimation of when we're going to be the restaurant, handover moments, et cetera, et cetera. So, that is a positive movement that we have, not only in UK, but also in Canada, Australia, et cetera. So part of why a trade is becoming more profitable is that. Then on top of it, yes, indeed, we are moving towards more Delco orders. And that is, at this point in time, the most efficient delivery network that we have in the UK. So if you move there from Stuart, or you move there from Scuber that has a cost benefit, that you can clearly see, if you look at the, I think it's slide 17 of the presentations, you clearly see that actually, that is a movement that's very beneficial to our profits in the UK. And a simple way of thinking about is that yes, I mean, you probably know how many logistics orders we have in the UK monthly base, the impact, even if it's just a pound on an order base is huge. It's huge for our business. And that's why we are making these giant leaps in profitability in the UK, you should expect that to continue, we are on the good track in the UK. And we are actually quite excited about the road to where further profitability [inaudible].

[Wim Gille, ABN AMRO]

So thank you. And as a follow up on that. So the UK is already growing, and already throwing up significant profits in cash flow. So when can we expect you to lean back in and actually start grabbing market share again, in the UK, rather than defending your current share?

[Jitse Groen, CEO]

That's a more complicated topic. We are investing more money in the UK. So it's not that we are decreasing on investments, they are actually going up. Whether that's going to lead to more markets, that also depends on other people that are around. So I think that's a difficult topic. And it is, again, it's not the thing that analysts should be looking at, analysts should be looking at the quality of the revenue, not about, look, I can give you a very obvious example, Flash grocery delivery, dollar revenue profitable, probably not. Not in the most countries of this. So I think that's the obvious thing that people need to be looking at. Can you turn all that revenue into decent profits? And I think we've proven in many countries because we're talking about segments now, right? But we have all these countries in which were actually quite profitable, not EBITDA positive, or adjusted EBITDA positive but profitable. People obviously take out the obvious example, such as Germany and Holland, but Switzerland is also highly profitable, Ireland's highly profitable. So there's all these businesses that generate these profits. And it's not straightforward, all businesses globally in food delivery or in food delivery adjacencies are going to be highly profitable. I know that that's what people assume. But that's not the case.

[Operator]

Thank you. And we'll take our next question from Marcus Diebel at JP Morgan.

[Marcus Diebel, JP Morgan]

Hi, everyone. Thanks again for the disclose on cash flow and give very strong metric, the cash flow generation. So that's very strong first off. My question is on the profitability, you highlighted for now quite some time that pooling is a key driver of profitability increases. And indeed, your mitigated metrics to 10% decline in TPO is quite impressive. And we also saw like, I think you sold 17x more or less are getting pooled now. So what I'm asking myself is, how much further is there to go in terms of EBITDA contribution from pooling, is that something you already rather radically have implemented over the last 12 months. But is there also some more scope to have cooling as a lever going forward, that’s what I tried to get, that's going to be great if you can get some light on this. Thank you.

[Jörg Gerbig, COO]

Sure. So I mean, like, as you rightly mentioned, we introduced cooling very successfully. Also, our partners are happy with the way how we are performing that. And we have also very clear customer consumer metrics on the SLA side, which we're fulfilling here. So far, we're mainly focused around the rollout of single restaurant pooling, basically, meaning you're batching, an order from the same restaurant, which means markets where you have a high density on an individual restaurant in terms of orders, you can patch a lot of orders. But then other markets where there may be more a general density in the market then rather, traded towards the restaurant mighty restaurants coming actually as a bigger impact. In terms of multi partners scooting, we're still to roll it out in some of our markets, so especially some of our larger sample, we haven't really rolled out our direct from pooling yet. So multi partner pooling. And this actually provides a further uplift to our efficiency of the logistical network. So there's quite a bit still to come. Some markets are already running with partner pooling like some of the markets, but like I said, the UK, for example, is still pooling that out. But this is one only piece, I mean, one significant piece, which is still to come, but there's even other things like changing the order flows, and also like Jitse was alluding to earlier, the hand over moments, basically the waiting time of courier in the restaurant, or potentially even where the consumer was optimizing, as well as by sending the order in the right moment. So -- we have to wait at the restaurant for too long. But then there's ample opportunity for further here, we just began really optimize the delivery network. And with the expansion, basically the third pillar, which I was talking about, you will also increase further reorder rates and scale and that again help to actually build a more efficient and denser network, which will lead to further profitability improvements. So that's quite a lot ahead of us, so we are very, very confident to be able to further improve the unit economics here.

[Marcus Diebel, JP Morgan]

Perfect, maybe, in addition to this, there's no contractual issue with the restaurants, I mean, some of them are not happy, or have a veto to multi pooling or so that you can just do what you think in this context.

[Jitse Groen, CEO]

You need to understand that this actually speeds up deliveries, people think it slows it down. But you need to think about this as we know when a courier is on his or her way to a restaurant. So let's say a courier seven minutes from a restaurant, we would still be able to accept another order for that courier. And because of that, that order, assuming that the restaurant can actually make that in seven minutes, that order has actually a much quicker delivery than the number one. Because then you need to find a courier that's free, and send that courier to the restaurant. So actually, it's one of the deliveries. And I know that sounds in goodness but it's actually foolish things that we're doing. They are great because they reduce our costs. And they improve our service. And that's obviously trying to do what we have done in last year. This is also why you see that we can still maintain our investments in markets. That's very beneficial to us. And we do expect that that's going to help us going forward.

[Operator]

Thank you. And we'll take our next question from Marc Hesselink of ING.

[Marc Hesselink, ING]

Yes, thank you. Can you please give some more insight on what's happening on covert and the ex-customers? Have I been correct that active customer additions have been quite similar for last quarters. However, the churn on the especially the COVID customers was much higher. We're still now down versus the half year ago. How's that trending? And can you increase that active customer base again in the second half of the year.

[Jitse Groen, CEO]

Yes, to be clear active customer base is 12 months, and therefore any effect that you see, you need to make sure that you think of this. So 12 months ago, obviously we're looking at last year. So there's a bit of a lag in when you will see an improvement of that figure, but usually when you will see our orders pick up, that's also that is typically when you have a new addition that are then compensated for the churn roughly.

[Marc Hesselink, ING]

Okay, maybe rephrase it differently, the churn levels that you're seeing or stay at an elevated level, or are they more, already more normalized?

[Jitse Groen, CEO]

No, because I think it's very important to understand that these customers left after COVID. So they left last year. So you, let's assume you have 100 customers, you will drop to 90, it's not that they dropped further, it's just that they are not there anymore. So you stay at 90, and then you grow from the 90. But obviously, if you look at as an active customer number of 12 months, then you are looking at the situation of basically in every six months ago.

[Jörg Gerbig, COO]

And on the churn, it was as more like the absolute churn number being elevated, because we had a lot of more new customers coming through COVID, but the relative churn number was actually doing very well.

[Marc Hesselink, ING]

Okay, clear. So you would say it's the normal behavior, again, what you're seeing on a day-to-day.

[Jitse Groen, CEO]

I think it's fair to say that Northern Europe, UK, Ireland, that looks pretty normal to us that looks like we're back to relatively normal seasonality. We still have a way to go, of course in North America and in Southern Europe. But North, the lion's share of our business looks like, it's in very good shape.

[Operator]

There are no further questions in queue. So I'll hand it back to Jitse for closing remarks. Thank you.

[Jitse Groen, CEO]

I do see that was my fault, actually, on this piece of paper. I'd like to round off this analyst and investor call by thanking you for participating and for your questions. And should you have any additional questions or remarks, please reach out to our Investor Relations team. Thank you.

[Operator]

Thank you, ladies and gentlemen, this concludes today's call. Thank you for your participation. Continue to stay safe. You may now disconnect.