Allegro.eu S.A. (ALE) Earnings Call Transcript & Summary

Let's start. Good morning, and welcome to Allegro IR call on the acquisition of Mall Group. Let me introduce today's speakers. We have with us today the CEO of Allegro Group, Francois Nuyts.

Hello.

And our CFO, Jon Eastick.

Hi, good morning.

And my name is Michal Kuzawinski, and I'm Head of Investor Relations. A few comments before we begin. Firstly, you can find the presentation that we will discuss today on our IR website. at allegro.eu, click on Investors, and you should see a link to IR presentation on the top left corner. Please download the presentation and read the disclaimer on Slide 24. We will have a Q&A session in approximately half an hour. The usual way you can ask a question by pressing the Q&A button that you will find at the bottom of your Zoom webinar screen and we will answer your questions once we start the Q&A session. And finally, this call is being recorded, including the Q&A session, and a recording will be available on our IR website at allegro.eu. Let's start. Over to you, Francois.

Thank you, Michal. So first of all, thank you for making the time on the short notice. As you well know, we have our scheduled Q3 results call on Tuesday, so this is really a call to focus about on the acquisition of the Mall Group and WE|DO, and I'll take you with Jon through the transaction and the logic of this amazing step in the development of Allegro and Mall Group. Without further ado, let's start with the slides, team. Great. Thank you. So -- If you remember, over the last few years, we spent a lot of time making sure that Allegro is a uniquely scalable company. We've built all the marketplace process, the onboarding for sellers, not only locally, internationally, we also worked on how can we help those sellers, more recently, export their wears to EU 27. And we've developed a best-in-class UX both on desktop and on app. And we've always looked at this with the intent that this platform does processes the team would be so scalable that it would make so much sense either organically or through acquisition, to scale this to other countries, notably in the regions where there is obviously logistic proximity. Acquiring Mall and WE|DO is all about accelerating this. We'll look at what's under the hood at Mall and WE|DO in a few slides, but really, the intent here is you take the technology that we developed in marketplace, you massively game change the selection, the price competitiveness, thanks to that technology. And as we've seen across many countries, not only in Poland but across the world, when you game change the selection, the price, the delivery as we know how to do to a consumer base, they shop more and more consumers join. That's really at the basic of what we plan to do. This has been obviously a quarters in the making and the interaction across both teams has been fantastic, and it's great that we have such alignment to now build that next step. Before I continue on the -- how do you say, on the strategic logic, let me hand over the mic to Jon, who is going to take us through the transaction details.

Okay and thank you very much, Francois. And good morning once more. It's really great to be taking you through this transformational acquisition that we've announced this morning. I'm going to just go quickly through the transaction highlights. Francois is going to obviously tell you a huge amount about Mall over the next few minutes. We're acquiring 100% of the Mall Group and 100% of its sister logistics company, WE|DO, from the 3 sellers, PPF, ECI and Rockaway. We're expecting that the transaction should close after Competition Authority approval towards the end of the first half of 2022. We're paying EUR 925 million enterprise value for the business, which equates to 1x the trailing GMV for their financial year, which is ending March of '21. It is also 7.2x their gross margin. Both of those figures are significantly a discount on the trading multiples of Allegro. After EUR 44 million of debt and debt-like items that we'll be paying off, the equity value is EUR 881 million, we'll be paying that in 2 components. 53.7% is going to be paid in cash, that's EUR 474 million. We have a lot of money on our balance sheet, as you know already, that will be about 60% of the total. Approximately EUR 200 million, we're going to raise from the financial markets in the near future. It most likely will be a Polish zloty bond, but there are various options for raising the financing. When it comes to the equity component, we are -- 46.3% is being paid with issues of new shares in allegro.eu. And in this case, we actually have a fixed structure that you can rely on here. It's 33.6 million shares that will be issued. The price is based on the 3-month VWAP, which is at 55.98 and that will be what we'll issue to the shareholders. And that equates to a 3.3% dilution of the existing equity. Final point, we estimate that if the transaction does close towards the end of H1 next year, how do the box the combined leverage will be just under 3x debt to EBITDA. So that's the key transaction highlights. So I'm going to hand it back to Francois, who's going to start taking you through a lot of details around this amazing transaction.

Thank you, Jon. So over the last few quarters, there's been a number of teams both across Allegro and Mall kind of looking under the hood and looking at what does it mean and how we would integrate. But first, looking at Mall, you can see that Mall is across 5 countries, we're not -- you can see that it has, I would say, a number of brands, which are loved brands across the region with a very strong customer base. You can also see that it's a business, that is much more 1P than we are. But it's actually started at 1P to third-party transition with some success. It's growing fast. And really, the basic of what we intend to do is take the technology to scale up that marketplace at a totally different pace, to increase the offer, at the end of day, consumers and merchants have in the region. And we'll go through a few of those numbers. We're also acquiring a company called WE|DO, which does courier, last mile logistics, pickup points and lockers in very similar ways than what we're building. You may have seen the announcement of lockers a couple of days ago. And aggregating these 2 teams, obviously, it's an acceleration of our know-how. So what does it bring to Allegro. It actually brings quite a large consumer base to which we can bolt in some of the retail basics, the large selection that we can find on Allegro. It's actually a massive TAM. It doubles our TAM from day 1, and it's also a very strong team. As I said before, there has been a lot of interaction over the last few quarters between the teams to see how these teams would integrate together, how do they think, how do they look at the business, and it's looking very good. We're also getting some actual critical fulfillment operations that will be core to succeeding in this cross-border merchant trade. The whole intent here is to create a pan-CEE commerce platform. What does it mean in very simple world, retail basics again. It's these -- in the region, there is no one-stop shop where you can find the tens or hundreds of millions of offers that people have learned to use in countries like Poland, but also in other countries. So by using the 100,000 merchant base, using all the onboarding tools that we've created not only for Polish sellers but for international sellers, we can massively game change what is on offer for consumers. Not only -- and also across the different means, whether it's on desktop or it's on app. We can also use the technology we've developed to make a marketplace feel like a 1P, whether it's delivery experience, whether it's competitive pricing, to have a very competitive offer to consumers in a way that doesn't exist across the region. For merchants, what does it mean. They get a double the consumer base and the growth opportunities, but they also get all the tools, the seamless tools, the onboarding tools that we created over the last years, and this list once, sell everywhere that we developed over the last few months. All in all, as we well know, it accelerates the retail side well. If you start with the selection, the technology, the process and the consumer base, it increase the execution and increasing the GMV per consumers much faster than the organic route alone would have allowed us to do. So here, I'm not going to go here in detail on the rationale for the acquisition because I'm going to cover that in the next slides, but really from the key point, right? It really, from the word go doubles our TAM across highly attractive countries, over PLN 1 trillion. It's, at the moment, a scattered competitive landscape, right, where you have multiple competitors across the region and you don't have one place where consumers can find everything. They still shop around for the best price. So by turbocharging, by adding all the selection, the pricing that we've developed across Allegro Group, we can see how that's a game-changing experience for consumers. If we do this, we've known in Allegro, in across multiple countries, we see not only the existing consumers shop more, but more and more consumers come to the store. It also gives us great fulfillment assets and operations and fulfillment in a way that it accelerates our own road map in Poland by the knowledge and the infrastructures that we're getting. We spent a lot of time over the last few months interacting between the 2 teams, and we can see there is a fantastic -- not only cultural alignment, but also metrics and input-based culture that, as you know, has been so core to the success of Allegro over the last few years. All in all, you'll see that it also gives us an opportunity to develop not only the retail basics and the merchant marketplace, but it also gives us an opportunity to scale things such as SMART!, such as fintechs, such as adtech and other things in the platform, whether it's search or app, across multiple geographies in the way at much greater speed. So as I said, from the word go, you can see that those are 2 similar consumer base. It doubles our TAM. It's similar to 38 million people, 32 million people close to PLN 600 billion retail market, PLN 540 billion retail market. What you do see indeed is also e-commerce, is on the reasonably earlier stage of development, which means there's even more headroom to grow in the region than there is in Poland, where it's still significant. So you can see that GDP in each of those countries very similar to Poland is growing fast, but it has a lot of space to reach kind of a European closer to average, so it can continue to grow for the years to come. If the GDP grows, you'll see as we've seen in Poland, there's a outsized opportunity for more consumer spending. And you see across the region, it's growing fast and can continue to grow fast, the entitlement is massive. And similar with e-commerce, and you've seen some of the similar slides when we go through our Q3 or through IPO, the penetration of e-commerce is actually well below what it is in Poland. And Poland still has a lot of catching up with the rest of the region and benchmark. So there's massive headroom to grow e-commerce much faster in the region. So let's move to what's the competitive landscape. You can see 2 things on this slide. First, that Mall brands across the regions have a very strong positions, and you can also see that it's a very scattered landscape. This reflects the fact that for consumers, consumers shop around in region, there is not one place where they can find everything always at the lowest price with the greatest convenience, both presales and post sales. And this is all about building this. And as we well know, when we build this, consumers follow, and consumers follow very fast. So here in terms of what's combining the 2 brings us as a competitive edge. So here, back to retail basics to a large extent, right? We see that in Mall, there are about 5 million offers. The combined marketplace can bring over 200 million active offers from over 100,000 combined merchants, and that's even before the added TAM and the added consumer base makes the whole continuously more attractive with the flywheel that we've seen working very well for us in the past, notably as we keep on improving the onboarding tool for local sellers and international sellers. Well, obviously, develop the same tools in terms of keeping the platform competitive for consumers, right? Consumers find it. It's always the more competitive price, consumers invariably come more direct and direct to the platform and shop more and more with the platform. And obviously, if the selection works, the pricing works, the delivery work as we know how to do, then you start building out things such as SMART!, you can see that this is the accelerator, the additional rocket fuel on the consumer experience and the acceleration. So how do we intend to do this. We've spent quite a bit over the last few years, again, making the Allegro platform, the process driven, both on the consumer side but also on the seller, onboarding and servicing side, a very scalable operation. This is about bringing that technology and making sure that all the country iterations benefit from that technology, not only on the consumer and on the -- but also all the different tools that we've developed, whether it's on merchant sourcing, it's on international sellers, on adtech, on fintech. Overall, what it will mean in terms of core benefits, it's a much larger merchant pull, which means larger selection. Much larger selection pool and offer pools being more competitive pricing. We'll obviously use the technology that we've developed over the last few years to make the platform very efficient in being price competitive. That third-party model that is efficient as one piece, not more, but at much better economics to tackle both selection and pricing. We'll do things around SMART! and convenience to boost consumer engagement. And all in all, we'll integrate the team across, so our R&D and our technology scales across the region. All in all, that should accelerate our development, by the way, not only across Mall Group but also at Allegro. So obviously, we're talking about slightly different mix at the moment between Allegro and Mall Group. Mall Group is 90% of 1P, 10% marketplace. You can see Mall today has about 3,000 merchants, 5 million offers, but they've already started that transition from 1P to 3P you can see, 3P grows quite well at 130%. Obviously, we mean to totally turbocharge this and move from 3,000 merchants, 5 million offers to multiples of that. But it's not only about bolting on and turbocharging the third-party platform, it's also about improving the 1P existing core. At a moment, you will see in a second, Mall is actually quite successful, operating one of the most difficult categories that are to operate as an e-commerce e-retailer, electronics. Doing electronics is one piece, probably one of the more difficult category, and the fact that they do a breakeven is actually quite a success. But there are many more categories you can add to that mix where you can get selection, GMV incremental and much better economics even within 1P. So let's look at Mall today. It's a massive traffic generator, 350 million visits over the last 12 months. It's got a nicely growing customer base, which is obviously what we want to bolt in the selection and the pricing to upscale their purchase. And it accounts for a reasonable percentage of the online population across the region. But as you can see, there's still a lot of headroom to grow on that dimension. When, for example, you compare to Allegro at the bottom of the slide. So let's look at how to drive wallet share expansion. What you can see here to the left of the slide is the current offering of Mall Group, got 5 million offers, which is quite a wide choice of product. You can see at the bottom of that first column, it's mostly in electronics, small electronics in Home & Garden. Again, some of the early categories of e-commerce, but also some of the categories that are harder to execute profitably in 1P. You can see the Allegro selection mix, 228 million offers, so multiple of that, but also across a much more varied categories. As we've seen invariably at Allegro, but also across multiple platforms around the world as you add many, many choice and you become really the place for consumers to find whatever they're looking for, you can massively uptake the GMV per customer. And here, you can see the size of the opportunity by adding the selection, the price and the delivery convenience to the Mall Group versus what a benchmark like Allegro and Allegro is still growing. Obviously, we'll do SMART! on top of it to rocket fuel that acceleration as we do the selection and the pricing. So as I was mentioning earlier, we only get a retail and a marketplace, we also acquired an asset called WE|DO, and WE|DO and Mall Group have quite a number of warehouses that are strategy located, which will help not only our development in the existing region of Mall but also will contribute to help the cross-border commerce and the fulfillment by Allegro that we are building in terms of helping merchants' ports across the region. And we do also brings a lot of expertise in courier and last mile delivery that we're developing. You probably will have seen our launch of lockers a couple of days ago, our acquisition of a courier company a couple of weeks ago. So here, the addition of the know-how across will really help us drive this execution and the operations in a much greater level of control than we have so far. So couldn't go through this deck and not talk about the team, right? We spent over the last quarters at quite a great level of detail and engagement through managers in the company, getting to know each other and building obviously, the business case and the value creation plan. And you can see there is an uncommon obviously, retail knowledge, tech knowledge and integration, what I love to call biz tech across the company. We're acquiring a team that is about 2007 strong between the geographies, across the marketplace and the operations. It's a group that is very innovation-driven and teamwork. I can say it's not only obviously Jon and I that are here today, but across the team and across both parts, normally when we did the employee engagement, there is that level of energy and excitement of making this work that is so core to a successful integration. So last but not least, this is not only about bolting the retail basics, right, and making them work much better across the region. This is also about taking all the other components of our flywheel and making it scale across more merchants and a wider consumer base, whether it's Smart!, whether it's our delivery experience, whether it's advertising, adtech, fintech. And we can see here where each team see the opportunity to scale that road map and those invested tech resources where we spent so much time scaling over the last few years and scaling this across a much wider consumer base and TAM at the end of the day. Jon?

Over to me? Yes. Thank you, Francois. So you've just heard from Francois the amazing plans that we have to transform the marketplace element of the Mall business, leveraging what we have here to deploy both in terms of technology and merchants in -- across the Mall region. So I'm just going to try and put some numbers on this to give you some context. So the first slide that I'm going to go through is just looking through a quick pro forma of when you put the 2 businesses together. So on the left-hand side, you have more or less half year numbers from this year for the 2 groups on a 12-month rolling basis and then a pro forma on the right-hand side. So we've already talked about it, but the TAM, just as a reminder, PLN 1.1 trillion combined TAM that we're going to be getting a return on our investment across that population. In terms the -- next 2 metrics, I think, are very important just to show the scale of what Francois has been talking about in terms of when you deploy a vertical marketplace with lots of price and selection, with excellent retail basics. Look at the frequency that drives. If you look at the left-hand side on Allegro, 5 billion visits on a 12-month basis from 13 million active buyers versus Mall, where it's a much higher ticket 1P retail model, lower frequency, 350 million visits, right? So as we do that transformation and turbocharge the marketplace, you can see that we'll hopefully going to get that kind of frequency increase in the Mall footprint as well. When it comes to the key metrics, the GMV combined would be about PLN 43.3 billion. The revenue would go up significantly to PLN 8.2 billion. That's because, obviously, 90% of the Mall business today is 1P, so the total value of the goods goes into -- the goods sold goes into revenue. In Allegro, we have about 2% of our business in GMV terms going -- coming from 1P. To try and get a measure of margin before downstream costs like logistics and marketing, we're comparing here the monetization on Allegro, which -- gross monetization, including advertising, and the margin on 1P in comparison to the gross margin that we get from the 1P business Mall. So overall, the average of those 2 would be about 11.7%. EBITDA-wise, we generate the PLN 2 billion, the amazing economics of the marketplace driving that EBITDA coming on the Allegro side. So when you put the business together, it looks like that. Now let's talk about what we think we can do with it financially within the Mall existing footprint, so within those 5 countries. So our midterm ambitions, you see here. So this is a projection covering 2022 to 2025 is our expectations of what we may be able to do when we implement this strategy that Francois outlined. First of all, that marketplace transformation, we would see moving from a 10%, 90% 3P 1P split towards 2/3 marketplace 1/3 1P in the Mall countries over that period of time, so that's that turbocharging effect. In terms of GMV, we think that would translate into something like 30% CAGR across those 4 years, and that's because of the extra frequency, the extra merchants coming on the local merchants that we think will be interested to join across the Mall footprint will drive that GMV growth. The revenue growth, because of the big element of 1P that's in the starting point, won't grow quite as quickly. That's going to be more sort of a mid-single-digit type of CAGR as we shift towards marketplace business model. But adjusted EBITDA-wise, once we've gone through the investment and transformation phase over the first couple of years, we expect the relative size of the marketplace to take over in terms of driving profitability gaining scale, gaining leverage, and we should get towards 2.5% to 3% of GMV within that 4-year period. So that's what we're aiming to do with this strategy. I'm going to hand it back to Francois to summarize.

Thank you, Jon. So to wrap up, after spending quite a bit of time across the teams creating the business case and the road ahead, the reason why we're so excited about this deal and the execution that follows is it nearly doubles our TAM. It really gives us an opportunity to create #1 consumer proposition in retail, that means game-changing selection, price competitiveness, delivery. And we do that mostly by turbocharging Mall's, third-party marketplace. Something Mall has already started, but with all the tools and knowledge that we've developed, we can truly fully accelerate. Invariably, if we do this, not only at Allegro we've seen it, but also in multiple geographies, we can see how consumers follow and shop more and more. WE|DO and also Mall also gives us access to a team and assets that are a little bit ahead of us in the development of logistics capabilities, which means our own road map in Poland accelerates. There is a strong cultural alignment which is so core to executing such an integration. It's not only about the strong controller alignment that already exists, but it's also about how pan-CEE champion also gets us access to broader talent across the region and beyond. And then what you'll see us doing -- we have already been doing it for quite a while, but it's developing this consolidated technology across the region that enables us to scale not only the marketplace, but also all the initiatives that we do -- or most of the initiatives that we do already in Poland and across the region in a seamless way across the different countries at the scales that wouldn't be possible country by country alone. So all in, it's really the first day in many ways of this, but I'm super happy to share the biz deal and the excitement around the teams for it and the execution of it. Now without further ado, Michal, do you want to start the Q&A?

Yes. Thank you, Francois. We are ready to take your questions. You have sent a few of them already. If you would like to ask a question, please remember, you have to click the Q&A button, which is on the bottom of your Zoom webinar screen. Let's start. A few of you are asking a question why Mall Group hasn't grown faster in the past, including the COVID-19 tailwinds, and what gives us comfort to be able to accelerate that towards 30% in the midterm.

So it's obviously something we spent time analyzing. I think Mall Group is at a reasonably early stage of scaling up the marketplace, right? You can see where that -- I think it was in one of the slides where you can see marketplace is growing at 130%. But it's still too small, right? It's a CAGR at the end of the day to have a bigger impact on the total growth of the business. As we all know, there is quite a bit of technology to develop to have a seamless marketplace by the onboarding process we know because we spent quite a bit of time at Allegro over the last few years developing that technology. What invariably we've seen is as you develop that technology, roll it out, and we know how to do this, you massively game-change the selection. If you massively game-change the selection, in layman terms, you offer much more choice across many more shopping opportunities where currently mostly has Electronics and Home and Garden, you offer sort lines, you offer automotive -- books, automotive. Consumer shop more. If you make sure on top of it that it's price competitive, consumers shop more. You find ways to improve the shopping experience, whether it's all the algorithm we have on search, on suggestions, consumers shop more. It's a playbook we know so well that it just needs to be executed, and the partnership between Mall and Allegro is all about this, making sure that we get that know-how across the group to get those retail basics and they're not called basics for nothing. There are things that are need to be executed and executed well.

Then Ivan Kim from Xtellus is asking if we can grow faster than 30%, given the low penetration and high fragmentation in those markets.

You'll often hear me and Jon in the quarterly. I think in business, it pays to be humble. So let's start by executing and then we'll talk again.

Then we have a series of questions about profitability and margin outlook, maybe starting with the educational question from Konrad Ksiezopolski from Haitong. Why are Mall EBITDA margins so low compared to Allegro?

I think it was -- as Francois was saying earlier in the presentation, because of the electronics being the core of that business, it is a very, very competitive area of e-commerce. And generally speaking, in electronics -- consumer electronics is relatively low margin business. And the business has not yet developed in terms of the scale it would need to actually get that lift off and leverage on its operating costs to get above breakeven. It's a matter of time, I think, but it isn't quite there yet.

We agree. And I think it's also -- kudos to the Mall team being in front catalog, consumer electronics, 1P. It's the hardest place to be for sure in e-commerce.

Then we have a question from anonymous caller, what profitability do we target for Mall and by what year?

So we had that measured in terms of a percentage of GMV, yes. So similar to the way we present it when we talk about Allegro's profitability, adjusted EBITDA, to GMV margin. And we would expect that we would be able -- even though we're growing extremely quickly in that projection, by the end of that 4-year period, we'd be between 2.5% and 3% of GMV in adjusted EBITDA margin.

Then we have a question if the stated ambition of 2.5% to 3% EBITDA margin is not too low relative to what Allegro is making today?

Well, it's a midterm outlook over 4 years, yes. So -- and as Francois said, we need to see how it goes. We have a lot of work to do ahead of us in order to make this all come alive, and then we'll see how things are developing. But in principle, as the business scales, because of the business model of 3P, as you keep growing that business, the incremental costs that you're adding are much lower than in a 1P model. So I wouldn't say the sky is the limit, but certainly the margins can keep growing as the business grows into the future.

And then we have quite a number of questions about the path towards that profitability. So we said what the target is, but we also have mentioned investments in the first few years and how big those investments in profitability could be in terms of EBITDA impact over the next couple of years?

I'll talk about the type of investments. So first, we need to go beyond -- within 1P, we need to go beyond the kind of consumer electronics catalog. There has been also, in the way Mall operates today, has some constraints put in the types of selection it carries even within electronics, the type of traffic and consumer acquisition activities it creates. So we want to remove some of those constraints to grow the consumer base and the traffic. Because at the end of the day, what midterm and long term matters, the more you grow that consumer base, that frequency, the more you get the share of the wallet, the more you get to upscale -- turbocharge, I'm using that word a little bit too much. But the marketplace, in short, the more consumers they have, the more frequent they have, as we've seen in the flywheel, the more they shop that accelerating selection that marketplace provides. But I do expect a little bit, what is that term, trough at the beginning as we remove some of those self-imposed constraints.

Then we have a question about the intended CapEx investments. Where are we planning to spend this money?

So it's mainly in extra, as I -- yes, mainly in additional logistics capacity because as we build that business up, then obviously, the amount of goods that we'll be moving to customers is going to be dramatically bigger. And as in Poland, we're rolling out fulfillment centers for the 3P part of the business. And also lockers, we would be doing the same things in the Mall footprint, so there will be CapEx needed for that. We're trying to -- the vision is to have a very similar model in both -- across both the Mall region and Poland. The major difference will be the mix of the 1P and the 3P where Poland will stay mostly -- much more a 3P business, whereas we see sort of the 1/3, 2/3 mix in the Mall region.

Yes. Then we have a few questions from Miriam Adisa from Morgan Stanley. Firstly, what are our expectations in terms of 1P, 3P mix over time from Mall group?

Yes, I think I mentioned that in the presentation. So we're aiming to transform it from 90% 1P, 10% 3P to a 33% 1/3 1P and 2/3 3P over that 4-year period of the projection.

Then a question about the competitive landscape in the Czech Republic. Miriam notices a big gap to the #1 player, Alza. How have the market -- segment shares developed over time, and is it our intention to become #1?

I like how you phrased it, segment share. You know me here, right. In a region, notably where online penetration is reasonably small, whether somebody has 20% of that small part of the pie or 30% of the small part of the pie is not, for me, the most relevant number. It's more around out of total retail, which is a massive -- sorry, I get my currency confused, but...

PLN 1.1 trillion.

PLN 1.1 trillion across the region, about half of it in the Mall region, and we get many more to consumers to shop online. And what we see at the moment across the region, there is no place online where you can find the selection, the choice where you can go and be reasonably sure that you'll find a competitive price. And when you can get the type of quality delivery across the breadth of the catalog, interest doesn't exist. So this is about building this in a way that we know how to do it. And we've seen in Poland that across multiple geographies how off-line shoppers move to online. That's a given by now.

Catherine O'Neill from Citi is asking if we see all of the Mall markets as core markets for us.

Interesting. I think there are obviously countries within the Mall groups that have a larger TAM on their own. But yes, I think in the mix, well -- the way we develop the platform, it's a very one technology across. So doing additional iteration, and that's valued within Mall Group and within the future Allegro.eu Group, doing future iteration of that technology should mean that we can deliver the same kind of service in smaller countries. And that's really the core of the exercise there.

Catherine is also wondering if we expect any regulatory clearance challenges given Mall's presence in Poland.

I mean, obviously, you'll see, I think, over the next few days, we'll file all the needed regulatory papers, for lack of a better word. The overlap in Poland is absolutely minimal, so I don't expect that to be an issue. Also, as you'll have myself and Jon, this is about really turbocharging the seller base into Mall countries. The -- I don't expect the 1P/3P mix in Poland to change as a result of this acquisition, which I know is something of interest. So no. But obviously, we'll be working as always with the regulators in the appropriate countries to get that approval done and done well than as soon as possible.

Then we have questions about Allegro technology platform. Are we planning to consolidate Allegro technology platform, bringing it into all of Mall operations?

Overall, yes, but it's a bit of a simplification. I think there are obviously core elements of the main platform, whether it's, as I mentioned earlier, whether it's search engine, whether it's onboarding, marketplace processes, all of that technology that we've developed across over the last few years. Obviously, yes, there are components. We talk about WE|DO, we talk about 1P where Mall has actually some components, we will integrate, and it's totally adequate. And here, we obviously has an amazing tech team. After this acquisition, we'll have by far the largest tech team in the region, and they're going to start working on how do we make that integrated model work. But yes, obviously, a lot of the marketplace components, FinTech components, adtech components where Mall, because it was a little bit smaller, hasn't had as much R&D to put in. We obviously want to scale that R&D across the region, but we're also acquiring a great tech team with Mall, so they're going to give the Allegro Group a few things as a result, which is fantastic, and that's supposed to work.

Okay. We covered the tech platform, now with the brand. What's the brand strategy? Are we going to keep more brands in all those respective countries?

Stay tuned here. There is nothing to announce that at this stage. Obviously, there are teams that are working on what is the best way to convince consumers to keep shopping with us across the region, and the fact that the Mall brand is very well loved is obviously a key component of that.

Then we have a question about the headquarter costs at Mall? And are we planning any synergistic benefits there?

Really, the base case when we talk about synergies is about rolling in turbocharging, that marketplace platform. If you looked at anything over the last at least year, if not a couple of years, it's -- how difficult it is to find the right talent. And clearly, one of the big parts of the interest in that acquisition is getting the Mall talent on board. So this is not in that sense. We want to keep that headquarters, we want to keep the tech hub, and we actually want to scale the tech hub and the headquarter to help us scale across the region. This is about delivering much different GMV growth more than anything. And as Jon is saying, obviously, getting that OpEx to GMV ratio better because we grow so much faster.

And a couple of questions, interesting questions from Cesar Tiron from Bank of America. Firstly, how much will you dedicate your time to Mall group versus [ Poli ] business?

So I like the question, I would phrase it slightly differently. Obviously, we spent a lot of time within that acquisition and within the team making sure that this didn't remove the focus on Poland. Poland has so much headroom to grow. We need to keep on innovating, keep improving the shopping consumer experience, the merchant consumer experience, whether it's -- and some of the projects around adtech and fintech that we're doing. But this is not, how do you say, with the difference with an organic launch, this is an addition of the Mall team. So where we were, I think, by the end of the area -- end of the year, sorry for mumbling, about 4,500, with this we're about 7,200. We don't want to keep different business models, so that's where I kind of pivot. Over time, we want to have one business model. So when you're focusing on the business model, it doesn't matter whether it's Poland or whether it's Czech, this is the execution on the business model. And there is a little bit of work to be done over the next 18 months on getting that technology and those processes ported across the region. One additional thing that I'll add, and nothing to announce at the moment. But you'll also see how it help us attract further talent, world-class talent to our teams, which is one great way to tackle some of the complexities of some of the projects we need to develop over time.

Then Cesar is asking if you picked one single thing that you could improve the most in Mall group, what would that be?

Selection, price and delivery. Sorry, those are 3 things, right? Well, let me rephrase. Retail basics.

Thank you. And now Pawel Szpigiel is asking about the geographic structure of Mall revenues.