Delivery Hero SE (DHER) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am [indiscernible], your Chorus Call operator. Welcome, and thank you for joining Delivery Hero's conference call. [Operator Instructions] I would now like to turn the conference over to Daniel Fard-Yazdani. Please go ahead.

Yes. Good afternoon, everyone, and thank you for joining this call today. I assume that you have all received the slide deck that we have sent out. If not, you can find it on the IR section of the website. Before I hand over the call to Niklas and Emmanuel, let me just quickly summarize the purpose of the call. Today, again, we have said, when closing the transaction with Woowa about 2 weeks ago, we wanted to give an update on its size and the performance as soon as possible, as we know that you have all been waiting for this additional information since long. Given that we weren't really able to get access to the information before the closing, it was quite a challenge to put everything together in this short time frame, and we have worked hard together with our colleagues from Woowa on this. I'm saying this to set expectations regarding our ability to answer questions in-depth at this point in time. And also, very importantly, as you have seen in the invite, while we are also aware that you are very much interested in the paths forward from here and basically the guidance on 2021, this is nothing we can provide today. We will need more time to combine the budget of Woowa with that of Delivery Hero. And as such, we will be giving guidance at a later point in April. Please keep this in mind also for the Q&A session at the end of the call and to also [ collect ] this now already, it would be great if you could limit your questions to 2 per person so that we can cover as many participants as possible. But now, and without further ado, let me hand the call over to you, Niklas.

Hey there, everyone. Hope you are all doing well. So I can't tell you how happy I am to finally have closed this transaction. We have spent significant time together in the last few weeks, and I'm super excited about the plans we are working on, not only in Korea, but for the whole region. Together, we will pursue our common goals. As you can see on Page 2, Bongjin and his team share a vision which is very similar to the one that Delivery Hero has pursued for the last 10 years. We are both putting the customer at the center of what we do and are both aiming to provide an amazing experience, with the logistics part of the business becoming a more and more relevant component of this. As you can see from today's presentation, Bongjin and his team have built an amazing company and business in the last 11 years, and we are excited about the prospects of working together going forward. You all aware of the long time it has taken us to get there. And on Slide 3, we have done a small recap of the transaction and its unfolding of the last 15 months from signing of the deal to closing of the transaction earlier this month. We would like to receive -- or would have liked to receive the regulatory approval much sooner, for many reasons. One of those reasons is that it kept us from making operational decision together with the Woowa management for all of 2020 and the start of this year. This created an opportunity for competitors to use our restricted capacity and budget to execute and gain more traction than what we would normally have allowed. Now that situation has been clarified, you can be sure that we are eager to respond adequately in the marketplace and make full use of the strong brand and product offering that Woowa has built in the past, and we will contribute all we can from our side and our experience to enhance the customer experience further and share our competitive advantage wherever needed. Let me also touch upon where we stand regarding the divestiture of Yogiyo. The process has kicked off formally, and we have initiated all necessary steps to ensure an optimal outcome for Yogiyo, all the Korean colleagues who have built a tremendous business in the past, but of course also for Delivery Hero and its shareholders. You know that we have at least 6 months' time to find an adequate buyer, and we have received healthy interest from various sides already. Given the nature of the process, I can't give you much more details today, and we will update you as soon as possible on this. Let's now turn to Slide 4 and an overview of the development of both Delivery Hero and Woowa over the last 8 quarters and our combined size. Together, on a pro forma basis, we received 648 million orders in the last quarter of 2020. This is unparalleled to any global peer outside China. As you can see, there has -- or there was some acceleration in growth during 2020 and in particular, for the last quarter in Korea. Growth came from around 55% at the end of 2019 to circa 80% in Q4, and this is partially driven by COVID. We would expect this to normalize as we reach the 1-year mark for COVID. And in Asia, this started in February 2020, but the impact was never as material as in Europe and North America. Before Emmanuel is going to give you an overview of the growth and further financial profile of Woowa, let me give you a short introduction on the company on Slide 6. The company was founded in 2010. It has more than 1,000 employees in its headquarter and a bit less than 2,000 including the affiliates. While South Korea is its home market and currently their by far largest operations, they have also started a business in Vietnam in 2019 and launched in Japan at the very end of last year. Similarly important -- again, quite comparable to Delivery Hero -- while the initial footprint was in the pure food delivery business, Woowa is also seeing tremendous potential that the grocery business is offering. They have therefore started in 2019 with their so-called Bmarts, which basically follow the same logic and concept of our Dmarts. Again, Emmanuel will cover this later in a bit more detail. And last but not least and very importantly, we have not only looked to combine a business with ours, but also happy to welcome a great management team to Delivery Hero. We have, as you know, always had a great respect for successful founders, and this is very true for Bongjin and his team. Bongjin will become part of the newly initiated Global Advisory Board, together with Emmanuel and myself. He will also be the Chairman and Executive Director of the joint venture we are forming, and which will manage not only the Woowa but also our Asian operations. Seyoon Oh will be the co-CEO in the JV, responsible for overseeing the Woowa business. Furthermore, you have Bomjun Kim as the CEO of Woowa Korea; Jaeha Song as the CTO of Woowa Brothers Korea; and Kiwan Ihn as the Head of Overseas Business, which consists of Vietnam and Japan. To conclude with the overview of Woowa Group, let's then move to Slide 7, it summarizes the order GMV revenue and EBITDA numbers for 2020 and the development that has been made last year. And as you can see, group orders grew with more than 300 orders to 729 million. This was far above any expectation. Part of this overperformance was driven by slight tailwind from COVID-induced restrictions, I believe a good, but more normal year would have added more like 250 million orders and ended the year on around 650 million orders. Regarding EBITDA, it is important to call out that these are Woowa's numbers and therefore not yet necessarily in line with the adjusted EBITDA definition we are using at Delivery Hero. Hence we know when adding these numbers pro forma to those of Delivery Hero, there will have to be adjustments and we will be able to speak more to that when we give guidance in April. Last year, Woowa managed to deliver EUR 14 million of EBITDA despite material investments into Bmart and Vietnam. Those investments will be scaled further in 2021 in addition to Japan. Korea Food vertical generated EUR 156 million of EBITDA. So with these remarks, let me now hand over to Emmanuel before we'll answer your questions to the degree possible. Thank you very much.

Well, thank you, Niklas. And good afternoon, everyone, also from my side. So just as Niklas, I'm very excited about the closing of the transaction, which took more than a year to complete. And I'm happy also to provide you with a more detailed overview of Woowa business. On Chart #9, you see the overview of Woowa's food delivery business in Korea. Overall, the performance was very strong and in 2020, orders in GMV grew by 67% and 71%, respectively, year-on-year. In December alone, we had over 40 million orders -- monthly orders compared to a year earlier, and this is several times more orders than all other market participants did combined. The business also took a big step forward in terms of profitability. The EBITDA increased by almost 400% to EUR 156 million, while the revenues increased by 77%. So as you can imagine, we are very happy about Woowa's performance in 2020. And despite some new competitors entering the market, Baemin continued to show significant growth and a sustainable strong market share. As we work closer together, we hope to leverage some of our delivery capabilities and especially in regards to logistics. We have proven to offer the fastest and also the most efficient delivery set up in all our markets, and Korea will not be an exception. Today, Woowa's shares of on delivery orders stand at around 3% nationwide, while Seoul is around 11%. And although it is too early to give specific guidance on this topic at this point, you can be sure that the introduction of our industry-leading logistic capabilities in Korea is very high on our agenda. And we're super -- extremely excited to bring this to the Korean market and to build the best value proposition. Now let's move to Slide #10. And you know that we don't usually like to share data on users and also order frequency because we don't want to [ indicate ] our competitors. But today, we are making an exception as we have had several investors asking about the aggressive entrance of Coupang Eats. So what you see on this slide is the development of our monthly active users on Baemin as well as the average monthly orders frequency throughout 2019 and 2020 in Seoul. In the essence, this confirms our strong belief that our customers are very loyal to our service and that we are not very impacted by large discounts offered by competitors. So now let's move more over to the overseas business on Slide #11. So Woowa is present in Vietnam in Kombucha and in Japan. So let me start now with Vietnam first. So Baemin Vietnam was started only in May '19. And while we are currently only active in the 2 larger cities, Hanoi and Ho Chi Minh city, and Baemin is already the #2 player in the country. We are very happy to add Vietnam to our footprint. The country checks all the right box for us. It has a population of more than 96 million people, a very high mobile penetration rate and a very attractive population density of more than 400 people per kilometers. So Vietnam just fits perfectly to our existing footprint in Asia, and we are excited to be there and expect to build a strong business here over the next few years. Now let me say a few words about Japan. Baemin launched in Tokyo in December 2020 under the brand Foodneko. And as you know, foodpanda also launched in Japan a few months earlier, although not in Tokyo. So we continue to be very optimistic about the opportunity in Japan and look forward to further strengthening our business there with the addition of Foodneko. Because I know that the question will come up later, it's fair to assume that we won't pursue a dual-brand strategy in Japan going forward. But we will provide you an update on this at a later point when we can. When it comes to the financials, given the late entry into Japan, the vast majority of these numbers refer to Vietnam. GMV grew several hundred percent to reach EUR 66 million in 2020 and revenue is EUR 16 million. So we are still at very early stage in this business, and it's fair to assume that we will accelerate the investments during 2020 -- 2021. So now let's move more on the Bmart and Woowa other business on Slide 12. On this slide, we provide an overview of Woowa Bmart business as well as other verticals including restaurant supplies, robotics and kitchen business. Woowa started fully promoting the business in the fourth quarter after doing a soft launch earlier that year. So this business is still quite young. And at the end of 2020, Woowa had a total of 32 Bmarts in Korea, with most of them in Seoul. While the overall concept is in line with our strategy around Dmart, the profile is slightly different. They currently carry around 10,000 products that we also call SKUs. And they have the maximum delivery radius of 5 kilometers and focus on delivering in less than 30 minutes, while our Dmarts in comparison carry around 3,000 SKUs for smaller radius of circa 2.5 kilometers. In 2020, the Bmarts generates 10 million orders and more than EUR 100 million in revenues. As operation is still focused on getting scale, gross margin are still negative. And consequently, EBITDA for Bmart and other business were negative by EUR 84 million in 2020. It won't surprise you when I say that we are super excited about this Bmart fitting our strategy very well. And while I can't be more specific about our future plan at this point in time, we can be sure that Bmarts will be a big focus for us in South Korea. Before we go into Q&A, let me also briefly touch upon 2 further topics around the transaction with Woowa. So first of all, let me give you an update on our goodwill impairment. You will probably remember that we flagged this in early February, that we may have to do a goodwill impairment upon closing of the Woowa transaction. And we put the size of the potential impairment at up to around EUR 1.4 billion, depending on the final share price of Delivery Hero on the day of the closing. Now with this event now behind us, we can actually narrow this down further. Today, we think that the size of the potential impairment will be most likely below EUR 500 million, so significantly lower than the amount we initially expected. And second, we want to provide you a quick update on the long-term incentive plan that have been set up in connection with the formation of our joint venture in Asia. As you know, Bongjin under the Woowa management team will run operation in Asia going forward, and we are super exciting to have them on board to further improve our business in the region. And as part of the transaction, it was agreed that an amount of up to EUR 120 million will be paid out over a period of 4 years, depending on certain GMV and EBITDA targets being achieved. So when taking your question now, please let me remind you again about the fact that we can't give you proper 2021 guidance today. We are still in the process of integrating Woowa's budget into ours, and we plan to provide you with an update of our group guidance in April, at the latest with the release of our Annual Report at the end of April. And while we are in the middle of the onboarding [ exercise ] after the closing 2 weeks ago, we wanted to give you this update on the size and performance as soon as possible. Some KPIs, such as our EBITDA, will require further investigation to be fully comparable with our Delivery Hero definition. But we thought that sharing this insight early as possible would already give you a better understanding of the size of our new partners. So we are really looking forward to this as we are very optimistic that 2021 will be another successful year for our company, for Delivery Hero. But for now, Niklas and I are happy to be available for any question you might have. And I thank you for tuning in.

[Operator Instructions] The first question come from the line from Joe Barnet-Lamb from Crédit Suisse.

I think just 2 questions, and I certainly don't want to abuse that. So just 2 from me. So firstly, when you announced the acquisition of Woowa, you stated a view that the Korean aggregated GMV in 2030 could reach EUR 30 billion. With such monumental growth in the market in 2020, do you still stand by that estimate or do you believe that it could be larger? Secondly, can you talk a bit about the evolution of both monetization strategy and commission rates for Woowa, both through FY '20 and also how you see them beyond that as well?

So I can cover that. Yes, you're right, 1.5 year ago, so we announced that we think that it could be a GMV of EUR 30 billion. I think on every estimate we have done over the last 10 years, they have always been very bullish, but in the end turn out be far lower than what the reality says. And clearly here as well, we -- I know, we don't give any guidance, but I think the market is very, very large, and our momentum has been tremendous over the last 15 -- 14, 15 months. So I think we can have good hopes to beat any expectations that are set in the past, and maybe we can beat all expectations of those [ that are ] set in the future. Then to your second question around commission strategy, we don't focus on the commission now. We want to deliver an amazing service where everyone is willing to pay for and everyone is happy to pay for. And we have so many other areas to work on than on pricing. However, we now move in more stronger on logistics. And having a premium service of logistics also means that we will have a more of a low-cost offer as well as a more high-quality service offer. That high-quality service offer of logistics as we have shown in many other markets where we can deliver very fast, and we can do it at good economics. So we have seen that our gross profit on GMV has been clearly positive now in almost every market and for sure, the regions. And we expect that that gross profit under -- for the world, we're going to set somewhere around 11%. I think we've guided to in the past 11% or 12%. And that's what -- this is a choice by us and not the other way around. I don't see this being very different in Korea, that if we deliver a high-quality service, and we work really, really hard on efficiencies and on every aspect of logistics and using our tools and tech set up, and we should be able to reach that level also in Korea. And now, of course, I believe that the logistics will be a larger part of Korea long term. So that will then change the balance a little bit on the commission, but we are not going to change any pricing. We are rather going to launch new services, high-quality service of logistics with normal take rate, what you can expect from a high-quality service. Maybe I should also add that, as you know, when you launch a high-quality service and you push that very, very hard, that also means that it takes you 12 or 18 months, where you do not set the pricing where you expect efficiency to land or where you have the efficiencies as of today, but you set it where you think you will drive it to in the next 12 or 18 months. So that means we are going to push this hard. It will be negative economics in the beginning until we have worked on the efficiencies, and we accept to be negative economics for that time. But we know that whatever price we have, we will be able to drive it towards our gross profit target, but rather in 12, 18 months. So that means significant investments as we launch this and push this in the beginning.

The next question is from the line of Miriam Adisa from Morgan Stanley.

My first question is just on growth for last year. How much of -- how much do you think the growth was affected by COVID? Perhaps if you could share some color on what you saw in terms of AOVs throughout the year? And can you also just remind us on what the situation was in Korea last year in terms of lockdown? And then also what you think drove the acceleration in Q4 that you mentioned? And then my second question, just on Coupang. What have you seen from them in terms of competitive intensity in the last couple of months? And also, are there any things that you see them doing differently, perhaps around delivery? Are there any areas that you think they might be stronger in? Any color you could share there would be helpful.

Sure. So on the first topic, so the growth, COVID and impact. So I mentioned earlier that on the order size, we -- I think we were at 415 million, if I don't remember wrong, in 2019. We then achieved in the end -- for 2020, we achieved 729 million. I think a good year, a more normal year without COVID, we would have probably landed somewhere around EUR 650 million. So there would have been a EUR 260 million increase, that's roughly the increase that we would have expected in this market of a yearly increase. So now this was some tailwind. It was, of course, not the same tailwind as we have seen in Northern Europe, and I think also our peers in U.S. have seen, where we basically doubled our numbers. That was not the case in Korea. And partially, this is also because they've had less COVID, they have been much more prudent. They started already in February to avoid meetings, face masks have been used to from several other incidents in the past and therefore they are very on high alert, but there were not necessarily strong lockdowns. It was more society driving it there. There were then also later on some restrictions on how many people can be at an office and there were some restriction of some restaurants, but they were significantly less than what we have seen in many other places of the world. So therefore there was also never the same effect in Korea as we've seen in many other places. In the last quarter, especially in December, there came some restrictions around meetings, I think, of 5 people. I think that further drove our growth in December, but I'm definitely not an expert in all the restrictions that have been in Korea. So I encourage everyone to maybe look online and see if there's something I've been missing or if I'm portraying in one or another way not 100% correct. I'm not 100% expert myself. Then when it comes to Coupang, I think they have a good logistic service and that's been their key. I don't think it's remarkable in any way. It's decent, but no means better than what we do in Taiwan or better than we do in many other markets. I would rather say it's slower than what we do in many of our Asian markets. But they have been faster in logistics in Korea, and they've been pushing logistics more than what Woowa has done. And that has given them a little bit of an edge on the service side. On many other aspects of the service, I think Woowa has done really well. And I think on those, Woowa is probably stronger. It's a very likable brand. It's a very nice cool hip that were good in the branding side. They have, of course, a restaurant coverage that's phenomenal. So I think if you take that delivery time aside, then -- and I would argue that Woowa has a very, very strong product. And now we're going to combine it with our logistic experience and making sure that we can also deliver things faster. And I see no reason why we wouldn't. It will take a little bit of time. So this is hard to do overnight, just to set expectations there.

The next question is from Andrew Porteous from HSBC.

Two for me as well, please. Can you just talk about the opportunity in logistics in Korea, given the market structure? There's long-term penetration, given you're coming from a sort of marketplace starting point. Does that look lower than, say, some of your other Asian markets, maybe more like Europe or Korea? And then longer term, where do you think Korea sits within that sort of 5% to 8% GMV margin target you've talked about?

Yes. So I think there's a lot of opportunity in delivery in Korea. What you see, though, today is that a lot of delivery is already professionally made. So it's not necessarily the same as it is maybe in Europe, that every restaurant has their own delivery crew. And therefore, a lot of non-scale, nonefficiencies, nonprofessional delivery experience. Korea has a lot of third-party logistic companies like [indiscernible] was a big shareholder, and they do deliver for a wide range of restaurants, so hundreds or thousands and thousands of restaurants and therefore have a lot of scale, very efficient logistics systems, very cost effective. So -- but they have not yet optimized it for service but rather for efficiency and that's where it differed to how we do, that we optimize for service, and then we make sure that the efficiencies is also there. But that's why it's a little bit different in Korea. But this also means that we [ compete with ] something that is very cost effective, and we're also going to leverage through this third-party provider. We have a great relationship with them and work closely with them to make sure they'll have order tracking, having them push the service level and a better service level with their existing teams as well. So I think we can also scale logistics through those third-party providers and achieve the same thing as we would have built it ourselves, but potentially under similar cost to -- yes, on a similar cost. Then when it comes to the 5% to 8% EBITDA to GMV, long term, I see no structural reason why Korea would be any different than any other market. So if we operate logistics as efficient as we can do in every other market then we should reach a gross profit margin of, let's say, 11% of GMV. And then from there, I think Woowa has already proven that they're incredibly efficient on the overhead, incredible efficient in the marketing, they already have operations and scale. And so I have no worries. Also the EBITDA -- or the cost below gross profit is going to be no higher than any other market. And therefore, we should also expect that we would, long term, as we roll out more logistics, reach that 5% to 8% target. But it will take time. And firstly, we need to build a great service, have customers loving it and then work very hard on efficiencies and yes, driving returns.

The next question is from the line of Sreedhar Mahamkali from UBS.

Yes. A couple of them then, please. Firstly, you talked about EBITDA comparability, were you able to call out any elements that might be hampering that comparability back to deliver your EBITDA currency, please? That's the first one. Secondly, are you able to give us an idea of the business model? I know Woowa Baemin has a different business model in terms of commissions and flat fee, is there any sense you can give us in terms of revenue composition? And in the same sort of context, can you talk about -- you talked about value-added tools, logistics is one of those, but I think you've also talked in the past about other ways of boosting the take rate, including search-based commissions, et cetera, that you probably are using at Yogiyo. So if you could just talk a little bit more about that broadly, that will be super helpful.

Yes. So Emmanuel will cover the EBITDA comparability that could arise. In terms of the business model, so it's correct. They work on a flat fee, call it, or a listing fee. A restaurant can buy several listings. And we don't think it's the best system. We don't think it's the right system. Woowa doesn't think so either, but they have respected that restaurant, at least some restaurants tend to [ be clever ] -- at being better. And for us, it doesn't really matter so much. If and how you charge doesn't really matters. Since they think it's better, then that's also fine, and we're happy to live with that. In the end, the market is setting the rate. So the more value you create, the more slots restaurants want to buy. And therefore, the effective take rate will also be kind of adjusted or be a good outcome there. There is additional to this is there's still a lot of ad services that we can provide, a lot of extra benefits that can be provided to restaurants that adds a lot of value to them. And so there are more opportunities to make sure that we are appropriately priced. In general, it's today very low priced. And we have no target right now to change that for the Baemin business. However, we believe in logistics, and we believe in scaling logistics, we have done it in every market, and we believe Korea is no exception. We believe this is a better service. And therefore, we are going to invest significant amount of money there and significant resources there. And this is rather on a commission basis that you work here. And it will be similar prices as we price a high-quality service in any other market. And that also means that over time, as logistics becomes more important, the similarities to other regions pricing mechanisms will also be more and more similar. So I don't see any constraints in the current business model really. Emmanuel, do you want to comment on the EBITDA potential?

And just a quick one in terms of good take rates for logistics, are they similar to what you see in rest of the markets, in the 25 to 26 range?

Yes. I think. I think, yes, I think Coupang is -- and Yogiyo, for that sake as well, are charging a good take rate. So they generally charge something around 12%, 13% plus KRW 6,000 for logistics, so that's around EUR 4, EUR 4.5 something euro per order plus. So I think that the take rate that is in the market from logistic players such as Coupang and Yogiyo is a take rate that makes a lot of sense for restaurants for high-quality service, but also a take rate that we definitely can reach our target for gross profit at in, let's say, 12, 18 months, hopefully, or at least getting close to that level in the 12 to 18 months. I see no reason why we wouldn't.

Let me cover the comparability or difficulties of EBITDA. So part of the integration that we're doing right now is to make these things comparable. This is an exercise that we've done also like during the prospectus. And we need the time to completely analyze their EBITDA, the P&L of Woowa to make it comparable with ours. If you are thinking, for example, of positions like employees benefits that we treat probably differently according to EFS and to local GAAP. So on this, I can't give you a precise answer today. That's one of the key focus that we are doing right now to make it super clear and comparable so that when we come back with the guidance, we can make it equally and have a pro forma numbers that are making things comparable. So right now, the EBITDA is not completely comparable. That's why we don't talk about adjusted EBITDA today, but EBITDA of Woowa, and we'll come back end of April with comparable metrics.

The next question is from the line of Andrew Gwynn from BNP Paribas.

One of them has already been asked, but I'll change it to another one. But the first one, could you just give us an idea on the relative scale of Coupang? It obviously was pretty small, but it's proven pretty significantly. And the second, obviously, a big differentiator for themselves versus you guys is a much broader offer. So I appreciate, obviously, the Dmart or the Bmart is a growing part of the business, but could we see a significant amount of extra investment in that in order to be a comparable offer for the consumer?

Thanks. So we don't have any comparable numbers. We wouldn't -- yes. We have our internal estimates, but we don't share publicly. So we think that if you look at Woowa, and the market share has probably been in the range of 75%, 80% basis, stayed at 75%, 80% throughout the year despite massive investment. The share of Woowa has been fairly flat. And of course, it's hard to be at that level, 75%-80% market share, when there are several players in the market investing significant amounts of money. So I would expect that there would be a slight reduction in market share over time. But in absolute terms, we definitely think that we will be gaining market share and gaining leadership also going forward. I think also what is in the slide even if someone comes in and makes a massive promotion, a big discount, investing significant amount of money, hundreds of millions, it still didn't impact the business at all. You see the customers have keep going up. Frequency has done tremendously well in fields where they have focused all their efforts. So therefore, it doesn't really impact us. But of course, it takes a little bit of the long-term future market. But I don't think that in any market it's possible, sustainable, to maintain a market share of that size in such a market. In the long term, I think we should expect in every market that there will be a #2 and a #3. And we are used to that, and we have been thriving in that. And it doesn't really impact us that much. But of course, it's -- we really are very competitive people, and we want to offer the best service. And we will do whatever it takes to making sure that we have the best service. I think in that regard and you asked about a broader offering, yes, we tried to set our offering it makes a lot of sense in terms of consumer, branding top of mind. And the broader you get, the more you're risk losing that. And I think that's the main reason why you see that we have been winning against competitors like Grab. We have been winning against competitors like Uber. We have been winning against all of these multi verticals. They try to do food delivery and they try to ride hailing and in the end, consumers don't have them top of mind when it comes to food delivery. And that's why I think we have a massive advantage against the Grab or Uber Eats. And yes, as I said, we have seen that in every single market across the globe. I think that's a little bit the same when you go too broad also in your offering that you want to go a little bit broader because you want to be delivering more stuff, but you don't want to go so broad that you lose your core and that top of mind. And I think, therefore -- I think we have the right set or at least we're developing towards the right broadness of our service. But I definitely see that there is a big advantage for us that we still have that focus.

The next question comes from the line from Andrew Ross from Barclays.

Mine is a follow-up on how the orders of Woowa are actually delivered. So you said that the share of [ pure 1P ] is 3%. But how does the 97% breakdown between orders that are delivered by drivers employed by restaurants and orders delivered by drivers who are employed by third parties? And can you share any KPIs or differences in customer experience between when an order is delivered by one of these third-party networks and when it's delivered by either your 1P network or by Coupang's 1P network? I'm kind of trying to understand as you roll out 1P, are you doing that to add additional restaurants from what on we were today? Or are you doing it to replace a preexisting model that restaurants have been using for delivery up until this point?

Thanks. I don't have a number -- reliable number that I would dare to give in terms of what is the proportion of restaurants using a third-party logistic company, but it's substantial. It's very substantial. So -- and the difference then -- I don't know if you look at the restaurant delivering itself and a professional logistic company and us, when you look at the restaurant delivering itself, it's very -- some can be incredibly good. They can deliver, I don't know, 10 minutes, 15 minutes consistently amazing service, and other restaurants can be 1 hour. And that's a little bit problem at the service level -- and for many restaurants, it could also be a service level during peak and weekends might be different than other times of the day. When I look at a professional company, we often do stacking. And when you do stacking, there is also a big variation in delivery times. And it generally takes more time. So often, it could be 30, 45 minutes versus when we deliver is often under 20 minutes. So it is a clear customer service experience or significantly better that we deliver. Of course, we don't stack as much, which also means that it is a little bit more costly than if you stack. That means that for customers who really value quality and fast delivery it's perfect. They have our service. If people value price and don't care for time, well, there's a lot of restaurants as well as third-party companies. It can take a little bit longer time and it will be free delivery or very low delivery fee, but it can still be efficient. So I think there is also a good mix there, but we definitely are under -- we definitely have too little of our own delivery which is more than the 20 minutes. And we -- it's not so much adding new restaurants. We have a good restaurant inventory of 225,000 restaurants. It's not -- we don't have delivery necessarily for covering more restaurants. There might be a few that we want to add, but the biggest reason for adding your own delivery fleet is the service level. And that will also mean that some restaurants will move over to our delivery because it's better customer service, and therefore you can expect more orders.

The next question comes from the line from Sarah Simon from Berenberg.

Yes, I've got 2 very simple questions. First one was can you tell us how many Dmarts you've got in Korea through your own business at the moment? And then the second one was in terms of your own delivery through Yogiyo, how -- what proportion of orders have been own delivery, let's say in Q4?

So Yogiyo has around 10 Dmarts right now -- or Yo Mart, I should say. So it's less than what Woowa has with its 34 or something. Yes. It's also not been a strong focus of ours to expand on that business, given that we are in the process of selling. We, therefore, rather focus on a little bit other areas. Then when it comes to Yogiyo in OD, also here, we have been a little bit cautious. We have not pushed as much as one would have -- or what they have done in many other markets. It's -- yes, has been a little bit less of our focus. We are big believers in logistics, but I think the market in general is a little bit two-sided, some like it, some not. And since we are knowing that we are not the long-term owner of it, we probably add a little bit less of our own beliefs into how they've been operating.

The next question now comes from the line of [indiscernible] from TQ.

A couple for me, please. Could you please give us a bit more color around the strong profitability improvement at the EBITDA level in 2020 for food delivery, Korea? I know you probably don't have a very good visibility yet, but any color would be really helpful. And maybe linked to this, you mentioned that own delivery now stands at about 3% total orders, I think 11% in Seoul. Especially given that Coupang is better at the moment in delivery in South Korea, as a follow-up maybe to a previous question, what is the target here longer-term, more than 50%, for instance, and could you give us a sense of profitability between market versus own delivery orders at the moment, please? And as a second question, this is about the long-term incentive plan in connection with the transaction. Could you provide more details on the GMV and EBITDA targets that are tied to this full year EUR 120 million plan, please?

Maybe Emmanuel can comment more on it. But in general, the profitability has been driving for scale. So a significant increase in scale, and we haven't improved prices or anything or has been very marginal changes in prices or take rate. It's really just a scale impact. 2019 also was a year with significant promotion campaigns, both by Yogiyo, but also Coupang. I think both parties realized that that was not an efficient way of growing the business. Therefore, a little bit less of this promotional activity. So that -- those are 2 reasons for the increased profitability in food delivery in Korea. I cannot say where we will end up on the logistics side, but it -- and how long it will take, but we -- yes, actually, I will say that I think it will be above 50%. It's just a question of what time it will be there. And that I don't dare to say now, how quickly we'll get to that 50%. Long term, it can also be higher than that. But I -- above 50%, I think I would dare to say, but the timing unknown. Profitability, that would be -- is negative. It will also remain negative for a good amount of time as we're scaling this up. We will also do promotional activities on OD to making sure that people really learn this experience because we are behind. Normally, we wouldn't do that, but as we're operating on as a low percentage, we really need to make sure that customers understand that they can get the fastest and the best delivery on Baemin, and that we have a superior product to other players in the market. And in order to do that, we need to catch up. And there will also be some investments there. But Emmanuel may...

I mean, unfortunately, we can't give too much detail on that one. That's obviously confidential information. We can't give too much detail. And I just wanted to confirm what Niklas said it already on EBITDA. This is indeed a scale-up impact in reduction of marketing, as Niklas said. And also what we are kind of display on Slide 10 of this presentation today, the increase of active users and the frequency. So with the scale and with the increase of frequency, this is a positive impact on EBITDA. And that's underlying the growth that we've seen there.

Super. I think looking into the queue, that's been the last question we had. So if you have more questions during the day and the next couple of days, we are happy to take questions. You know where to find us. So I'll give it up for last remarks to Niklas and Emmanuel.

Not so much from my side. Yes. Thank you all your support. Super excited about our new push in Korea, now very, very hard pushing logistics, making sure that we have the best service. It will cost some money to get there. We obviously had a very good 2020, and we'll keep on having a good 2021, but there will be significant investment to catch up on the logistics side. We're also a big believer, as I said in Bmart. That is also in very early stage of development and investment. We will make sure that we keep pushing that. And now same goes for Vietnam and Japan. Two very good markets. We are also here in very early stage just about to ramp up. We believe a lot in these opportunities. If you take a market like Vietnam, it has the size and population of Thailand and Malaysia and Taiwan and many other markets combined. So a big portion of our APAC business combined with Vietnam. So therefore -- and we should expect that these are big opportunities that also require big investments. But as you also seen and you start seeing in our APAC business, we have gone through significant investment. And now we see the gross profitability going up. And as we build scale, you can clearly see the path towards profitability in these markets. And some are earlier than others, but we are big believers, and I think it has also paved out in the past and it will be so also for Vietnam. But it will take some time. With that, thanks for your support. Emmanuel, something from you?

Yes. Just wanted to tell that it was a long journey to get to this stage, but it was a very nice journey and a lot of efforts internally, and I thank you for your support and your patience because -- your patience, because it was a long journey, and I appreciate the fact that sometimes you wanted to have more information. That's why we came out today to give you insights and to share with you as much as information as possible and looking forward to having you again at the end of April at the latest. Thank you so much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for joining, and have a pleasant day. Goodbye.