Just Eat Takeaway. com N. V. (OTCPK: JTKWY) Second Quarter 2022 Earnings Conference Call August 3, 2022 4:30 a. m. m. ET
Participating companies
Jitse Groen – CEO
Brent Wissink – Chief Financial Officer
Conference Call Participants
William Woods – Bernstein
Miriam Adisa – Morgan Stanley
Marcus Diebel – J. P. Morgan
Monique Pollard – Citi
Giles Thorne – Jefferies
Andrew Gwynn – BNP Paribas
Andrew Ross – Barclays
Clément Genelot – Brian Garnier
Adrien de Saint Hilaire – Bank of America
Georgios Pilakoutas – Numis
Marc Hesselink – ENG
Rob Joyce – Goldman Sachs
Wim Gille – ABN AMRO
Jürgen Kolb – Kepler Cheuvreux
Sarah Simon – Berenberg
Sherri Malek – RBC Capital Markets
Michael Roeg – Degroof Petercam
Operator
Hello and welcome to Just Eat Takeaway. com’s mid-2022 earnings call. My call is Courtney and I will be her coordinator for today’s event. Please note that this lecture is recorded. [Operator Instructions]
And I will now give the floor to your host, Jitse Groen, Director General, to begin today’s conference. Thank you.
Green Jitse
Thank you, operator. Hello everyone and welcome to this phone convention with analysts and investors to discuss Just Eat Takeaway. com’s 2022 half-year results. On our corporate website, you can download our press release and slides from this convention of analysts and investors.
I will begin today’s presentation by presenting the highlights of the first 6 months of 2022. I will provide some additional data related to our strategy for building and operating highly successful food delivery businesses, the improvements already implemented we have made to deliver our full year adjusted EBITDA guidance, and opportunities to further drive the path to profitability. Brent Wissink, our Chief Financial Officer, will then explain the main financial points at the point of profit organization and for each of our operating segments individually. I will conclude the presentation with some concluding remarks, after which we will open the call for questions.
And as you may have noticed in our this morning, the supervisory board’s external investigation is now complete and, based on this result, we have decided that Jorg can continue in his role as the company’s lead chief operating officer.
Please stick to slide 4. I need to spend some time talking about the very important elements of our strategy for creating and operating successful food delivery businesses. First of all, we have a long-term vision of our company. an investment to expand our leadership in our target markets. We are confident that those leadership positions will lead to the strong network effects that characterize the food delivery industry and allow us to grow successfully and have long-term sustainable success. Following the merger of Just Eat and Takeaway. com, and the pandemic, we have made significant investments, specifically in the United Kingdom, but also in other countries in our portfolio. Most of those investments were related to sourcing partners and the deployment of a larger delivery network.
Because adding new customers is so vital to expanding our leadership, we continue to improve logo awareness in every country, to stay at the forefront of the customer’s mind. We do such things through, for example, TV commercials with stars like Katy Perry and outdoor billboards, but also through long-term marriages, like our sponsorship of the Champions League. We promote the delight of our client and his spouse through the best generation and product of its kind. We are constantly working to improve the profitability of our hybrid model shown, by exploiting difficult network effects. And since the middle of last year, the focus on getting better value for money has become even more vital and is now one of our most sensible priorities. We are expanding our delivery operations and operating frequently to improve power by expanding our generation, operating power and density. I’ll talk later about clustering probabilities, for example. And where it makes sense, we’ve made significant progress in expanding our market through convenience supermarkets, many of the marriages announced in the past, and our footprint now spanning more than 25,000 locations in all markets. Parent Finally, we seek a disciplined approach to portfolio control, as evidenced by our recent resolution to stop our activities in Norway, Portugal.
And now on slide 5. After an era of exceptional growth, Just Eat Takeaway. com is now 2 times larger than before the pandemic, which, of course, is helping to provide the scale needed to make this successful online food delivery business work. Of course, we’re also much bigger than Takeaway. com independent in 2019, which is the darkest orange color you see on the slide. This is applicable because it shows the extent of the adjustments that have been placed in the company in recent years. As you know, we have invested very heavily in scaling our delivery network in recent years, especially in the old Just Eat markets, which has taken a step forward in our overall offering to consumers.
And as you can see on slide 6, it’s encouraging that the steady percentage of delivery is now stabilizing and the percentage of overall orders relative to the market. These trends, combined with our focus on reducing our order-based delivery prices, are a vital development. The chart excludes our matching U. S. trades. and Canada, as the contribution margin, of course, for market place and delivery, is similar in North America. Therefore, we do not know if we are processing a market place or a delivery order in marketplaceplaces. Finally, on this slide, with the marketplaceplace base providing a higher price proposition to the customer than delivery, we expect this stabilization trend to continue in an inflationary environment.
Follow me on slide 7. Taken from our focus on the business model, we are also very focused on the geographies in which we operate. We are leaders in 17 of the 22 markets in which we are present. Very selectively, we are just a market in which we can make significant profits, and we very consciously decide where we operate. To illustrate this, around 90% of our GTV is located in Northern Europe, North America, the UK and Ireland.
Now onto slide 8. As discussed earlier, the first part of 2021 was record time with Just Eat Takeaway. com on the GTV expansion order due to COVID-19 restrictions and heavy investment in delivery. The exit from the pandemic resulted in a 7% decrease in orders in the first 6 months of 2022 compared to the same era in 2021, which was offset by higher average transaction value, innovations in value at entry and positive currency movements, leading to a strong GTV of €14. 2bn and a strong earnings expansion of 7% to €2. 8bn in the first part of 2022. However, Adjusted EBITDA particularly advanced by 29 % up to minus €134 million or minus 0. 9% as a percentage of GTV. This year-over-year improvement obviously points the way to profitability, both in absolute terms and as a percentage of GTV. We told you in previous meetings that our EBITDA innovations for this year are loaded. So as you can see, we expect an EBITDA margin of minus 0. 3% as a percentage of GTV for the current part of the year. I will communicate later on how we have already made innovations that will take us to this level.
On slide nine, we show Adjusted EBITDA for each of our four operating segments. North America was close to breakeven Adjusted EBITDA in the first 6 months of 2022, and even positive Adjusted EBITDA in the current quarter of 2022, despite peak rates in the US and Canada Array negatively impacting the Adjusted EBITDA through €73 million. Northern Europe continues to generate significant profits with an adjusted EBITDA of €12. 4 million. And in the UK and Ireland, we are encouraged by the progress we have made in profitability with Adjusted EBITDA improving by 70% to minus €18 million in the first part of 2022. This segment also posted Adjusted EBITDA positive in the current quarter. of 2022. Southern Europe, Australia and New Zealand saw notable relief in losses, and with investments peaking now, we expect profitability to continue to improve going forward. So, to summarize, we had positive adjusted EBITDA in 3 of the four operating segments in the current quarter. A transparent indicator of our good fortune is covering knowledge throughout the group.
The chart on slide 10 covers all of our markets outside the U. S. In the U. S. , and the maximum orders for any food delivery company come, of course, from existing consumers. Consumers are very recurrent and order more over time. During the pandemic, we experienced an era of exceptional growth, and the exit from the pandemic led to a relief in order volumes. Consumers, acquired during the pandemic, are very loyal. Our cohorts are therefore intact and the functionality of the new cohorts is excellent.
Moving on to slide 11. Si we have noticed that active consumers at the point of organization fall by 4% year over year, in the United States, the number of active consumers and the frequency of orders have increased.
On slide 12, we would like to update you on the progress made in addressing key demanding situations in the United States. First, on July 6, Just Eat Takeaway. com and Amazon reached an industrial agreement in the U. S. In the U. S. , providing Amazon Prime members with a one-year loose subscription to Grubhub, which strengthens Grubhub’s competitiveness in the U. S. market. It represents a significant expansion opportunity. Since the announcement, orders have accelerated and the deal will contribute to Grubhub’s cash flow from 2023. Second, as I said earlier, we know that payment caps are constitutional, and payment caps have now expired or been replaced at peak locations, and we’ve recently been encouraged through control of the city of San Francisco. We continue to seek legislative and legal answers to eliminate the remaining payment limits in New York. In short, we are very positive about the evolution of those payment limits in the United States. And third, in combination with our advisors, continue to actively explore the partial [full sale] of Grubhub.
Now moving on to slide 13. We’ve already made some smart progress in improving the profitability of our business, and we’ve put other levers in place to do so. We have many other levers for this. The 3 main levers are: order rotation; d shipping costs according to the order; and general expenses and operating expenses. Revenue is generated by expanding average transaction values, optimizing fees charged to consumers, and earning better returns. Deliveries are primarily based on scale and density, as well as technological innovation. In our markets, we sometimes occupy the leading position in the market, which brings consumption density. This is vital to increasing the number of deliveries our couriers can make per hour, thus reducing the load per gram. Continuums in generation are the byword in our industry, and we are implementing call management, further optimization of order aggregation, and efforts to decrease wait times. Cost-consistent and overhead will be controlled through automation, marketing power, and reduced overhead.
I would now like to spend some time on the innovations already implemented to provide guidance on adjusted EBITDA margin on slide 14. On the left side, you see the adjusted EBITDA margin we provided through the first part of 2022, which we’ll use as a starting point for the slide. As for pricing, we have higher admission fees the first part of 2022 and we have higher commission rates in Europe during the first week of July. We also achieved power and marketing gains from July. In the United States, we learned efficiencies following the industry’s agreement with Amazon. I must emphasize that those innovations have already been implemented and will take us to the middle of our guided adjusted EBITDA range for the full year 2022. And in the most sensitive of that, we expect additional price innovations, reduced delivery costs according to the order, for example, through grouping, and other efficiencies incompatible with national ones. In June, we announced a company-wide hiring freeze and are implementing several charge relief initiatives.
On slide 15, we would like to dive into one of the engines to increase the number of deliveries our couriers can make according to the time and decrease the charge according to the delivery, which is grouped or, infrequently, is called coincidence. in our markets, which has become a much bigger opportunity after signing a long-term global strategic partnership with McDonald’s in March this year. first part with a sharing in some markets, which already represents more than 20% of orders. We will continue to optimize and increase pooling rates in the current part of the year, which represents a significant opportunity for the future.
Moving on to slide 16. We reiterate our direction with a focus on profitability in 2022, GTV is expected to grow year-over-year to single digits in 2022 and the 2022 adjusted EBITDA margin is expected to be between minus 0. 5% and minus 0. 7% GTV.
Now I’ll pass the ground on to Brent.
Brent Wissink
Thank you, Jitse, and good morning, everyone. As usual, we start with a slide showing the reported IFRS and the combined profit outlook for GTV and adjusted EBITDA. The combined figures show knowledge with Grubhub activity included from January 1 to 21, and with figures from Norway, Portugal and Romania. excluded from 1 to 22 January, given their insignificance. Unless explicitly stated, all figures in the monetary segment are presented in combination. See the press release notes for further explanations.
Continue to the next slide where we show the monetary effects of the first part of 22. Our profits increased basically due to higher average order values due to higher food prices, specific customer rate optimizations, and currency fluctuations. In addition, we have higher profits from promoted venues through technical innovations in products. We have made innovations in our delivery operations, which has resulted in a significant improvement in profits minus order fulfillment charges. I’ll talk about that in more detail on the next slide. Improved earnings minus the execution charge contributed to organization-level adjusted EBITDA, which increased 29% to minus €134 million in the first part of 2022. Adjusted EBITDA as a percentage of GTV advanced through 40 core issues to minus 0. 9% in the first part of ’22.
Continue to the next slide where we highlight the improvement in our earnings minus order fulfillment prices. This measure is a key competitive merit for our company. By the economy of our unit, the company can achieve a net generation of cash. business in the coming years. In the first part of 22, we generated more than €1. 1 billion in profits minus order fulfillment prices, a build-up of 20% compared to last year. The main driving force of this improvement is the accumulation in profitability of our delivery operations in peak markets. As mentioned above through Jitse, this is a key goal for further optimization and innovations for the rest of ’22 and ’23.
On the next slide, we focus on the segments’ contribution to H1 Adjusted EBITDA performance compared to the same era last year. We achieved significant breakthroughs in profitability in the North America, UK & Ireland and Southern Europe, Australia & New Zealand segment. The improvement in the functionality of those 3 segments compensates for the slight reduction in the contribution to Adjusted EBITDA in Northern Europe and the accumulation in general office expenses. I will provide more details on the individual segments later in my section. However, the evolution of Adjusted EBITDA obviously reflects our focus on profitability. This was demonstrated across our more mature segments, with Northern Europe being highly profitable and North America, as well as the UK and Ireland, posting positive Adjusted EBITDA in the second quarter of 2020.
As a component of those results, the current quarter saw a sequential improvement in adjusted EBITDA margin to the first quarter of this year, and we are implementing new measures to drive margin improvement in the current component of 22. Among those moves are the hiring freeze brought on June 22, several strategic projects aimed at reducing extra delivery prices consistent with the order and generating efficiencies consistent with national ones, adding marketing optimization. In addition, we analyze organizational efficiency, if necessary, and charge relief measures to optimize the prices of our headquarters.
Let’s move on to the next slide where we show the bridge between adjusted EBITDA and loss before income tax source. These figures are provided on the basis of IFRS. The main parts of the bridge are non-monetary pieces, such as amortization of intangible assets, depreciation of constant assets, stock-based bills, and Grubhub’s goodwill impairment following Grubhub’s acquisition last year, whose Array, as you will remember, it was paid through the issuance. JET capital. to Grubhub shareholders. There has been a significant drop in valuations for the sector. In addition, macroeconomic points such as interest rates (market interest rate and equity volatility) put pressure on technical valuation measures under IFRS. Mainly due to those items in addition to Grubhub’s operational functionality, we had to partially write off the Grubub usage price, resulting in a recorded impairment loss of almost €3bn. As previously mentioned, on July 22, Just Eat Takeaway and Amazon signed an advertising agreement in the United States, strengthening Grubhub’s competitiveness in the US markets and representing a significant expansion opportunity.
Stick to the next slide which shows that we finished the first part of 22 with almost 890 million euros in money and money equivalents. We know that the company is successfully funded to execute the successful part. Also note that we have no debt payments. due at the end of next year. We conscientiously project our cash flow and are actively working to strengthen our balance sheet and liquidity position, adding potential selling assets and refinancing alternatives.
Next slide, please, where we show, where we look at each segment in more detail. In the first part of 22, our North American orders decreased by 10% after last year’s pandemic order peak. We believe that the partnership with Amazon and the oversight of Grubhub’s competitiveness constitutes a significant expansion opportunity. We also made very broad innovations to segment profitability despite the decrease in volumes, achieving positive adjusted EBITDA in the current quarter of this year. Tariff caps continue to have an effect in the first part of this year. However, without the impact of payment limits, North American adjusted EBITDA would have been positive through almost €70 million in the first half of 22. Fee limits have expired or replaced at peak locations since then. , adding San Francisco more recently.
Let’s move on to the next slide. You can see the functionality of Northern Europe. We have increased the GTV segment from one year to the next, maintaining the order volume achieved in the last 2 years. I would like to mention Germany, where orders have increased. year after year. Adjusted EBITDA for Northern Europe declined year-over-year due to higher courier prices and a buildup in IT expense allocation. However, sequentially, segment adjusted EBITDA for the first half of 2022 took a step forward compared to last year. The segment is in smart shape: the segment has an industry-leading adjusted EBITDA margin and profitability is expected to accrue in the current part of this year.
On slide 28, we describe the functionality of the UK and Ireland, after an era where we are correcting the old lack of investment basically in the delivery network in 22. We focused on returning to profitability, with segments achieving positive adjusted EBITDA in the current quarter of this year.
Let’s move on to the next slide, Southern Europe, Australia and New Zealand. This segment is many of our least mature markets. However, we are taking safe steps to concentrate our investments as those markets grow. This is reflected in the 8% earnings expansion, which is particularly higher than order expansion and profit expansion. The segment’s gain minus higher order fulfillment prices by more than 200% year-over-year, driven by the overall improvement in the unit economy in peak segments, countries and in particular, through a significant improvement in Australia, which is now generating positive earnings minus order fulfillment.
Next slide, pricing policy for major jobs, such as the body of workers and allocation expenses for global teams. I would like to mention that global IT purposes and revenues are not included in the prices of the main jobs, as they are allocated to the countries and therefore included in the adjusted EBITDA of the segments. The head office charge base increased year-over-year primarily due to investments in our core workforce and resolutions during the year that followed, to the expansion we experienced at the time. In 22, that body of workers’ prices are annualized, which is the main explanation for the accumulation of prices in the workplace from one year to the next. As already mentioned, we have initiated the labor force freeze that reflects the slowdown in trade expansion. for the year, we are looking for more power and opportunities to optimize workplace overhead.
On the next slide, you can see the functionality of iFood. iFood is a significant price asset for our company. It is the undisputed market leader in a mass market and has continued to record double-digit expansion in 22, even in the face of a strong festival in 21. iFood’s online food delivery business is now profitable, while we invest in high-potential vertical markets for groceries and food vouchers. price of this asset. And with that, I give Jitse the conclusions of this presentation.
Green Jitse
Thank you, Brent. Je will do so with the conclusion of the presentation on slide 32.
After an era of exceptional growth, Just Eat Takeaway. com is now 2x larger than it was before the pandemic. We continue to focus on executing on our strategy to build and operate highly successful food delivery businesses. We made significant progress towards profitability in the first part of 2022, with our 3 largest segments, representing 90% of our GTV, posting positive Adjusted EBITDA in the current quarter of 2022. Good progress is being made to make facing key challenging situations in the United States, and the industry’s deal with Amazon represents a significant growth opportunity. The innovations already implemented will allow us to be successful in our full-year 2022 Adjusted EBITDA direction, with other projects to be implemented in the current part of 2022. With only around €900 million in cash and cash equivalents, we have sufficient liquidity to finance profitability. , and we are running various features to strengthen the balance. We expect to achieve positive Adjusted EBITDA for the full year 2023, and our direction remains unchanged. And finally, we continue to actively explore the partial or full sale of Grubhub, and reiterate the goal of monetizing our participation in this.
We will now move on to the question and answer session. And as a reminder, we will only allow one consultation from each of the analysts to make sure that everyone has the opportunity to make their query and sessions [indistinguishable].
And with that, operator, I would like to open the for your questions.
Q&A session
Operator
[Operator Instructions] And the first comes from Silvia Cuneo’s line calling Deutsche Bank.
Then we’ll move on to the next question, which comes from William Woods’ line calling Bernstein.
William Bois
Due to the 6% drop in inventory since the beginning of the year and if you take into account your medium and long-term forecasts, inventory is trading at low multiples and you have a number of levers to improve performance. As a result, have you thought or had discussions about taking personal orders, potentially through personal capital?
Green Jitse
Well, it should come as no surprise that there have been a lot of conversations lately. Of course, we’ve also had conversations with personal equity firms. That’s all I can say about it. But your question is whether we have any immediate plans to privatize the company. I have to say no.
Operator
The next one comes from Miriam Adisa’s line calling Morgan Stanley.
Miriam Adisa
Just about the existing industry and what you’re seeing right now. I think what gives you confidence in accelerating GTV expansion in the current part of the year to meet your forecasts?I mean clearly, comparisons are easier, but the macro environment has deteriorated and they deserve to get worse in most of their markets. So maybe you can give us some color about what you started seeing in July as the competitions faded?And then how do you also think about the balance between the type Does it have an effect on the customer’s macro image request rather than the reopening and that has an effect on what you’ve noticed so far in the last quarter?
Green Jitse
I think overall, if you take a look at what we saw in the fourth moment, in the component, it was the most complicated competition, either from a numerical point of view, but also from a mechanical point of view Array in the sense of We’ve added a record number of new consumers last year, and have recently returned to stable visitor additions. And of course the net effect of that last quarter was negative. We see, and we’ve said it before, that we expect it to become less of a hassle for us beyond July, early August, and we see encouraging signs there. So that’s what we expect. If you’re asking us about GTV’s goal, you should know that there are still some pretty significant value developments that we’re seeing in the dining spaces that we have. Therefore, the value of the duration of the ticket continues to increase due to inflation. And then, in addition, we have worthy optimization. And of course because, we said before because our EBITDA target loads downstream, we did a pricing optimization in the current quarter that you may not see in the first year leg results, but you can see in the current leg. . So that’s also part of it. And then, of course, in the US, the Amazon deal adjusts Grubhub’s expansion trajectory by also supporting GTV’s superior expansion. And if you ask me questions about the macroeconomic circumstances, now that I am not an economist, it is difficult for me to answer. I know that in the last 22 years we have not been greatly affected by any crisis. And the explanation why is that in the top countries we play a game of penetration. Now obviously, penetration in a country like the Netherlands is already 40%. But our purpose is to be much bigger than that. But in a country like Germany, penetration is only 20%. And we have that penetration, so essentially bringing more consumers to our platform far outweighs any negative effects of a macro environment.
We believe that delivery will accumulate less temporarily because values, and I’m not just talking about deliveries, I’m talking about the value of food. The value of food for delivery restaurants is regularly higher than for the market. Therefore, that delivery will be affected. But, fortunately, we have the merit of also having many restaurants on the market. Pull. Therefore, we are quite confident that this will also meet the EBITDA targets.
Operator
The next one comes from Marcus Diebel’s line calling from JPM.
marcus diebel
I have a more technical query for Brent. Only about the highest CapEx. CapEx particularly in the first part of the year. If you can tell us a little more about it, what is its nature?I guess nothing has been replaced between CapEx And OpEx Accounting. But you can tell us what the nature of this is. of that, too, the next payment, that is, the output of the budget for iFood, can you tell us when and how much it represents?
Brent Wissink
Well, when it comes to CapEx, it’s actually augmented by the fact that Grubhub is lately in our numbers right now, which wasn’t the case last year. It is the main contributor to the CapEx buildup, as you may have noticed. before. In addition, it is also because it is the same as what we said, that is, we are expanding the staff. Last year we strengthened our staff, adding our technical and product staff and some of our products and generation advances are also capitalized. So this is also partly why it is built. What was the other question?
marcus diebel
Yes, the iFood investment and the calendar there.
Brent Wissink
Well, the financing of iFood – as we also indicated in the press release, on a later occasion – in July we supported the company with an additional investment of 60 million euros.
marcus diebel
It is ok. So are you limited through some additional IT pricing in terms of CapEx?
Brent Wissink
Yes she is.
Operator
The next one comes from Monique Pollard’s line calling from Citi.
Monique Pollard
As you mentioned, Jitse, the Amazon deal just replaced the expansion trajectory in the United States. So, I was wondering if I could give a color to what you’ve noticed there from this Prime partnership, whether it’s the number of new Grubhub Subscribers, which I saw there being [press] reports of 2 million euros added in the first 10 days, or anything about the expansion trajectory they see in this market would be helpful.
Green Jitse
Well first let me take you back to one of the challenges in the United States. Obviously, when we signed the transaction, we thought that we could use the EBITDA to invest in a rollout of delivery services, basically in the suburbs of giant cities. Array That was the plan. That plan was no longer imaginable because of the payment caps that were put in place, and some were, of course, transitory and some have become permanent, and we located them, and we talked about them during the presentation. . Part of this challenge has now been resolved through the Amazon deal because EBITDA was obviously going to be used, for example, for marketing investments. This is, for us, a very cheap way to expand the user base. So I can’t divulge the numbers because obviously we’re not the only party to this deal. We have a smart date with Amazon. And I think it’s safe to say that any of our corporations are very excited about this cooperation, but that also doesn’t allow me to divulge the numbers. But I would be very surprised if you don’t see anything, of course, over the next year in terms of further trajectory for this company. So while it doesn’t solve all the challenges that we face in the United States, it does solve a challenge of expansion and market share. And how far will it be, we are only 3 weeks away. So this is just the beginning, but it seems pretty smart to us.
Monique Pollard
Sorry, can I ask for a quick follow-up at this point of the payment limit?The payment limit point: Obviously, the San Francisco effect comes from 2023. So what will be the effect of the payment limit?payment limit in the future?
Jitse Green
Well, listen, we’re not, it’s not a major component of our orders in San Francisco. Therefore, we rely much more on lifting payment limits in New York. But obviously it’s very encouraging to see that our paintings that we’re doing, and we’re not the only ones, it’s also on DoorDash and Uber are doing similar paintings, to tell the local government that the payment limits are not constitutional, so it will be worth it for us. And so, we are hopeful that the rest of the United States will follow a similar trajectory. It’s not a promise, but it looks much better than last year.
Operator
Thank you so much. The next one comes from the Giles Thorne lineage of Jefferies.
gilles thorne
I tried to use the language about selling assets in the comments posted through Brent. Is this just a reference to iFood and Grubhub?Or is it going to come out, or is it going to leave other markets as it has done in Norway, Portugal and Romania?And if it’s the latter, it would be helpful to have your current opinion on your positions in Italy and France.
Brent Wissink
Well, of course, this refers to the 2 assets you’re talking about. But as you’ve seen, we’re constantly comparing the functionality of each country, and just like a smart capital allocator. We’ll see and what to do. Next. Well, you saw the 3 examples in the first half. But we are constantly comparing the functionality of countries.
gilles thorne
And just as a follow-up, it would be to have a little color about the restructuring that has just been done in France, logic and impact?
Green Jitse
And there were some fantastic markets in Just Eat, as you know, the UK, Canada, some very smart market positions, as well as smaller countries like Ireland. But there were also a few weaker countries, France added. Therefore, France has never been a strong control for Just Eat. And there was very little investment, for example, also in delivery. But last year and the year before, in this environment, we were able to buck the trend across France and make France a country of growth again. However, it was as a result of a pandemic. And I’d like to claim all of the company’s smart fortune, of course, but the smart fortune component of the company was created through the pandemic and not just the investments, of course, we’ve made or the adjustments we’ve made. I’ve done in business.
Now what happened in France, and this goes for the whole sector in France, in fact it’s not just about our business, it’s that this market has shrunk. And I’m not just talking about our business, I’m talking about the total market. And it fell particularly after the pandemic. So, in fact, much of the expansion in France has been reversed. Now it’s very different in other markets like the Netherlands, Germany and the UK, but in France that’s what happened. That also means that we had to review our plans in France and our investment point in France, because we no longer had the same expansion trajectory. And that is what we have done. This also motivated, for example, what you call the reiteration of various locations in France by the logistics arm. And it’s back similar to volume. We just have very little volume in those cities. But you should also be aware that Just Eat France has excellent market activity that is quite successful. So what we’re doing there is lowering prices and making the business profitable again. I understand that the question is, are you going to leave this company? I’m not going to rule that out. But obviously, if it’s going to be a successful business, it’s not a necessity.
Operator
The following comes from the line of Andrew Gwynn calling from BNP Paribas.
andres gwynn
Just a query about how the concert works. I mean, I think in the afterlife you’ve said it’s kind of a load problem. Obviously, anything you feel is right. It turns out that the compromise there is a bit more pragmatic, I guess. It’s great to have, but at a time when capital is a little more limited, it’s not something you’re so attached to. Let me know if I misunderstood.
Green Jitse
No. You deserve to see us verify to comply with all applicable local laws. And we just have a legal assessment that in the countries where we have workers, it’s really not legal to have loose pitches. And I know that our competition decides to forget about it, but obviously that leads to very high fines. This is driving competition outside of countries, with delivery to Spain being the apparent example. So it’s not so much a question of whether we want workers in a secure market. It is just an evaluation for ourselves, if something is legal and if we are not going to incur very high responsibilities. Because you may not see them as an investor, but we are a very high expense for companies that compete with us in certain countries. And you can take a look to argue against. But at some point, you will have to pay those fines. So it might seem reasonable not to hire your staff in the first place, but it will be quite expensive in a number of countries. In some countries it’s a bit of a gray area, we can also just take other action there, however we are very conservative in terms of breaking the law, as you understand.
andres gwynn
But particularly in the UK, there is nothing to recommend that this is some kind of legal work. Obviously, it has been tested several times. So is there a commitment there for on-demand work?Or. . . ?
Green Jitse
In the UK, in fact, most of our logistics network operates on demand. I know other people think it’s not the employee-based model, but it’s the case in urban centers. And urban centers come with visibility for us. And visibility is also worth a lot, especially in London, where, of course, we have never been very big and now we have controlled to constitute the 0. 33 of the London market. problem. There may also be other reasons why we employ our staff in certain [locations].
Operator
The next one comes from Andrew Ross’ line calling barclays.
Andre Ross
I tried answering Marcus’ question about CapEx and asking more general questions about liquidity. And gross currencies declined by around 400 million euros in the first part of the year. That’s a small leak in loose currencies beyond EBITDA. Can you tell us about the moving elements of coins with the end of the year in mind?I appreciate that you invested coins in iFood, but does it help us understand how many coins you can spend on advice?And when do we deserve to think that the organization will be loose coins here [indistinguishable]?
Green Jitse
Sí. No we can be very fast there. Obviously, what we show you is that we are making very smart progress in EBITDA and, of course, there is a burn in EBITDA. We are also trying to reduce this burning. But as we said, we’re in pretty smart shape there.
Operator
The next one comes from Clément Genelot’s line calling Brian Garnier.
clement genelot
So, my query is about the other type of cash in its [uncertain] type, about many financial characteristics. So what features are built in lately and which are obviously deployed between this bond’s capital base, lines of credit, asset disposals related to iFood and Grubhub, or even in Australia and Canada?
Brent Wissink
Well, nothing is excluded. We are exploring options. And we said we’re going to explore asset promotion, adding: Grubhub, it can be just iFood and maybe other assets if we think that’s the case, that we deem necessary. But we are also exploring refinancing opportunities of choice, and preferably not the ones that dilute shareholders. In fact, they are not at the top – in – top sensible list. But I don’t think we deserve to forget or exclude any option, if possible. We have a legal responsibility to explore everything, still of course, we will do it in a way that is favorable to all stakeholders in our business: the maximum favorable to all stakeholders in our business.
Operator
The next one comes from the Adrien de Saint Hilaire line calling from Bank of America.
Adrien of Saint-Hilaire
So, most of your peers lowered your GTV expansion forecasts to 22 and you didn’t. So, I wonder why he didn’t. fees? Or is there anything else?
Green Jitse
Well, as you know, we already lowered this target earlier in the year. I’m not saying we had a crystal ball, but everything we were already doing before. And besides, I’ve already talked about that. We’re seeing ticket lengths increase, and that’s of course a tailwind, and we have a deal with Amazon in the US. The maximum complicated in H1, and will be less complicated in H2.
Operator
The next one comes from the line of Georgios Pilakoutas calling from Numis.
Georgios Pilakoutas
Questions about the payment in shares, which accelerated a little in the first part of the year. Can you tell us a little bit about what it was, the kind of inventions on Grubhub and also an update on the way bonuses are rewarded for staff?And so could you maybe give some indications about this first part of the year, we deserve that we annualize this and in the future?
Green Jitse
Well, most of it, as you’ve seen, has increased quite a bit particularly in the last 2 years. The explanation of why this is in fact the effect of Grubhub. The effect of Grubhub represents more than 50% of what is lately in our P
Operator
The next one comes from Marc Hesselink’s line calling from ING.
marc hesselink
I would like to have a broader idea of the profitability of the United States for the current part of the year. With what has been replaced in the limits of payment and hunting, entering the current part of the year, and also the Amazon contract. Is it fair to assume that at Amazon, it might lose a little bit in its gross margin, but because of operating leverage, it recovers it and then in EBITDA, it has a positive impact?A little bit in those who move, please?
Green Jitse
So in terms of the payment limits, the adjustments are now in Canada, and the adjustments are in San Francisco, and San Francisco will only apply. I think it was January 31st, so in my mind. So, this will be the next update. in the payment caps. Then, if you take a look at the Amazon deal, which the Amazon deal does for us, it replaces a lot of our marketing. So, we have efficiencies on the marketing side, let’s say, as a result of this deal. And I think that’s why our expected EBITDA in the U. S. The U. S. will be slightly superior as a result, not a direct link to that, as a result of that.
marc hesselink
Can you say that the profitability of the U. S. execution rate is not the best of the U. S. run rate. Is the U. S. already in balance right now?
Green Jitse
Well, that’s a North American component, right?So, I mean, I don’t know how close you are to: which component is what, but if the North American total has a positive EBITDA, then I think you can connect the dots.
Operator
The next one comes from Rob Joyce’s line calling from Goldman Sachs.
Rob Joyce
You’ve talked about that so far, but I mean, more specifically, the type of department in southern Europe now, I think it’s between, if not the weakest, the expansion of orders in the last 3 quarters. Why are we so attached to this department, and probably a specific reference to Australia, which in my opinion is the ultimate loss?
Green Jitse
I think the query is about. . . what happened to the pandemic, right?So also connected to my answer about France. Now strikingly what happened in the pandemic was that everything we touched worked, because we were in a pandemic. And even you can have a clever story about countries like Romania. Even this story would be a smart story because it has had a very vital expansion in Romania. And if this expansion had continued, we would not have shut down Romania, but the expansion has not continued. And I think you see that in this segment as well. But you shouldn’t misunderstand the asset quality in the segments, because if you look, for example, at Spain and Italy, corporations are very well managed, but we may have invested more cash there because they were developing faster than they are expanding this year. And that applies both to marketing and, for example, to investments in sales personnel, and so on. Obviously, if you have a superior expansion, you will invest in more people to have more online restaurants and that kind of thing.
It’s going to be very difficult for every single food delivery company on the planet to suddenly get out of this expansion mode and into EBITDA mode because, yes, you’ve built your business. And also, if you take a look at the staff increases, most of the increases happened in the first part of last year, right? And that’s why your staff is now tall. And of course, if your orders drop a bit, everyone will say, hey, now your staff is too big. Yes, but we were in a scenario that was developing so much that we needed all of that. And that may be clearer in smaller-scale companies. Because the problem, for example, in Italy, is not that it is a bad business, it is that it still does not have the scale that the Dutch corporation has in Holland compared to the size of the population. Other than that, Italy is a fantastic company. It is above all the market, a giant piece of logistics. But yeah, essentially we have to fine-tune all of those activities, and it takes us a little bit of time to do that. We just talked about France. And it’s a trajectory that we essentially started last year in August, and we’re making smart progress there. But it takes longer, obviously in those countries compared to corporations that are already so big that you’d say, okay, yeah, we may have too much of a sales department. But yeah, compared to the EBITDA of the Netherlands or Germany, it doesn’t really matter. But it is important, of course, if you have a safe scale.
Rob Joyce
But what about Australia, I mean Australia, which is not a market company, four players in the market, probably most of the fairly penetrated cities, and which still have a fairly loss-making activity?What are the customers for this?
Green Jitse
In fact, we are cutting losses in Australia at a very high rate. And again, we have to do it, and I think Brent referred to that as well. If we don’t see one, because remember, we’re about to build those successful businesses at scale. If you can’t get there, it will be a clever explanation why for us, for example, to become a sales company. At the same time, it is now very complicated to take over running the business during a pandemic and compare it to the profits of the outdoor business during a pandemic. And that’s something we’re seeing now, it’s clear that all those numbers are behind. The current state of the business is much greater than what you see in the first part numbers, because we’ve already made all those changes, or at least some of those changes. So in retrospect, of course, if you ask us, would you deserve to have invested that money if you had known that the major expansion would end in February 2022?So we would have said, maybe we deserve to have replaced that trajectory. But evidently we didn’t know he would avoid it in February 2022.
Operator
The following comes from the Lineage of Wim Gille of ABN AMRO.
Wim Gilles
In fact, I have one to Brent. Si we take a look at gross profit, it has an increase of almost 20% year over year. So it added about EUR 187 million in gross profit from one year to the next, which I think is a smart success. But if we then take a look at how it ends and affects profitability and net income, our adjusted EBITDA on a comparable basis exceeds €55 million. This means that operating expenses have an increase of around 132 million euros. I have known about 13 million euros in general costs or headquarters costs. But that still leaves me with 100 million euros in additional apple-to-apple costs. And can you break it down for me?And also give us a cynical look or where do you expect OpEx to end based on the existing instructions you have at this point part of the year, i. e. are we going to continue?Are we going to see continued increases in operating expenses or are we going to remain stable?
Brent Wissink
Well, first of all, I think it also goes back a little bit to what Jitse just said. What we have done, the investments in people that we have made in the last year, surely also, for example, either in logistics but also in the headquarters, we are also in — those who are lately — – those who were not last year and now we bear the full charge of that. So that’s definitely a long-term focus point as well when we look at business reshaping at the length of the numbers, regardless of the length we end up with. Surely that’s the reason why from an operating, from an economicArray talking about earnings minus the order fulfillment prices grew faster because there we can use the benefits that are worth the increases, certain operational efficiencies, which are, for example, in a minus, surely to a lesser extent similar to the personnel, but under the gross profit, surely there is the charge of hiring and investments that we made last year, and those were in logistics, they may be in part consumers [reserves], expenses of the headquarters to a certain extent, marketing as well, but there we are also making it more efficient. But that’s probably why, say, we can’t show that improvement right now compared to the improvement you’ve seen in earnings minus order fulfillment prices. But it is hoped that here too you will see long-term innovations.
Wim Gilles
It is ok. Let me rephrase the then. how much he has done. . .
Brent Wissink
I will provide you with cubes of numbers.
Green Jitse
In this case, given the hiring freeze you have implemented, can we expect operating expenses to remain strong in the current part of this year compared to the first part of this year?Or do we continue to design continuous construction on this one?
Brent Wissink
It might not answer the question, however, many of those workforce freezes will be reflected in gross profit. And gross profit, sorry, order less execution fees. I can’t communicate about the gross profit because it is:
Wim Gilles
Unfortunately, we have to take care of it. . .
Brent Wissink
But this freeze will in fact be reflected in profits minus order fulfillment costs.
Operator
The next one comes from the line of jurgen Kolb calling Kepler Cheuvreux.
jürgen kolb
Just a summary of their 2 existing holdings, iFood and Grubhub. Jitse, maybe you can share with us the ongoing negotiations, or if you have negotiations to say goodbye to those 2 assets, what is the current status in this regard??
Green Jitse
I can only tell you that we have negotiations on both, but I will tell you what the prestige is.
Operator
The next one comes from Sarah Simon’s line calling from Berenberg.
Sara Simon
I just wanted to go back to the query that was made earlier about inventory clearing. So, in the current part of last year, he switched from a money bonus to an inventory bond. Therefore, the charge will now be under adjusted EBITDA. line. I’m just wondering if you can give us a concept of the duration of last year’s money bonus in the first part of the year, who wouldn’t be there now because it’s an inventory?
Brent Wissink
Well, last year, I have to. . . I just have to look. One second. Well, if it had been last year, the bonus that was paid in shares was about 25 million euros. So that translated to downward adjusted EBITDA. It was for European operations and education: the American bonus was 33 million euros, but it was spent. This was included in the EBITDA expense.
Sara Simon
So if we tried to make comparisons on the same basis, would you build last year’s EBITDA, adjusted EBITDA up to €33 million?Is this the right way to think about it?
Green Jitse
Yes. This will be the mechanism. But we can also chat offline.
Brent Wissink
Supply – advise you through the main offline points.
Operator
The next one comes from Sherri Malek’s line calling from RBC Capital Markets.
sherri malek
I just wanted to stick to the comment, a useful comment above about overinvesting necessarily the pandemic. Maybe it was similar to this segment. But I sought to reconcile that with the comments he made earlier in the presentation about how strong consumers have been from the pandemic and consumers’ overall KPIs have been quite resilient. So what has been weaker on the expansion side?Or what KPIs in particular have gone down as a result of the pandemic?
Green Jitse
I think they’re all superior, to be quite frank. All the frequency of orders returning from consumers is higher. However, what you see is that we are now adding fewer new consumers than the consumers that we are wasting because we added a lot of new consumers last year. This is the mechanism. So it is the case that most of those consumers are much better behaved. But obviously there is a difference between our operations in France, in a country where we are weak, and places like Canada, UK, Germany, Holland, Italy, Spain, Denmark, Ireland, all the places that were strong. Because in the puts, Array also sees that, for example, in the Northern European segment, the habit of users is much higher than before the pandemic and, as a result, that activity is now strongArray But if you pay attention to our Overinvestment comments are overinvestments compared to the existing length. And the existing corporate length is not the expected length for various countries. And in some countries it leads us to the conclusion, like Romania or Norway, that it no longer fits the profile of our corporate. And in other countries it can be like that; in fact, it fits the profile of the company, but last year we assumed a higher expansion than we obtained. And therefore some of the numbers are not where they deserve to be, and we have to work on that. And that essentially applies to the entire business, but it’s most obvious in the segment, let’s call it, Southern Europe, ANZ.
sherri malek
So is it fair to assume that visitor acquisition arising from the pandemic is more normal, a small decrease from what was expected?
Green Jitse
Customer acquisition is back to the levels we had before the pandemic, which is normal, but it’s obviously lower than the pandemic because other people aren’t locked in their homes.
Operator
The last one comes from Michael Roeg’s line calling Degroof Petercam.
michel roeg
Rather, it is an explanation that I am looking for. Brent commented on Northern Europe, on EBITDA in the current quarter and the outlook for the current half, and compares them to other periods. So could I repeat that?
Brent Wissink
Oui. Eh well, what I said is that the existing EBITDA in Northern Europe in the first part of the year has been higher compared to the EBITDA in the current part of last year. This is the comment I made in my – the presentation.
michel roeg
I think he said something about the execution rate of the previous current quarter, and expects it to increase in the current part of the year.
Brent Wissink
We will read the transcripts carefully, Michael. Si you have any questions, you can contact us.
michel roeg
It is ok. Well, a question about northern Europe, if I may. What was the effect of wage inflation in the first part of the year?
Brent Wissink
To be honest, it’s pretty detailed. Happy to come back to that. . . But in fact, there is also a discrepancy there. I mean, you can only take a look at the inflation figures that we regularly use as the basis for our wages. But it does not increase wages in real time. with inflation figures. Therefore, there is a regular delay. Therefore, I don’t think there is anything common compared to previous years. In this year’s S2, I said that in Northern Europe, our profit is quite healthy, and we look forward to that, which paves the way for further accumulation in [Q2] this year as well, under the measures we have. taken and the power gains we expect, and also presented.
Operator
Thank you. This is the last query in the queue. Therefore, I call you back for any final comments.
Green Jitse
Thank you all. We would like to conclude this call to analysts and investors by thanking them for their participation and questions. If you have further questions or comments, please contact our Investor Relations team. Thank you.