Delivery Hero SE (DHER) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Delivery Hero Q4 2023 Trading Update Conference Call and Live Webcast. I am George, the Chorus call operator. [Operator Instructions] And the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Bast, Head of IR. Please go ahead, sir.

Hello, and welcome, everyone. Thank you very much for joining our Q4 2023 earnings call. We would like to remind you that this call is being webcast and a replay will be available later today on our website. With me today, we have Niklas Oestberg, CEO; and Emmanuel Thomassin, CFO of Delivery Hero, who will take us through the most relevant aspects of our Q4 performance and the 2024 outlook. After that, we look forward to answering your questions. And now let me hand over to you, Niklas.

Thanks, Christoph, and hey, everyone. First off, Happy Valentine's, and thanks for joining. We know you've seen our preannounced results, and we are excited to give you more color on our performance today. So let me say upfront that we understand that many shareholders are keen to understand our liquidity position, and we have heard you. I would like to ask you to view our liquidity in context of our performance and the many levers that we still have available to increase our margins and cash flow. This gives us great confidence in our ability to manage our liquidity. Our conservative plans contain ample cushion and do not rely on any M&A outcomes materializing. And if conditions change, we have other plans and can pull other levers. We will share more information on this topic in a few minutes, but let me first share more about our performance to set the stage. So our business continues to advance with GMV growth of 7% year-on-year in Q4 and full year 2023, both numbers in constant currency and excluding the effect of hyperinflation accounting. That means we have reached the upper end of our 5% to 7% guidance range. Revenue grew faster. It grew with 16% in Q4 and continued to outpace the GMV development. Due to a strong growth in combination with strict focus on profitability, the adjusted EBITDA margin rose to 1.1% in H2 2023, which corresponded earnings uplift of EUR 390 million in the second half of the year alone. For the full year 2023, this means adjusted EBITDA increase of more than EUR 870 million. The strong adjusted EBITDA improvement has been seen throughout the business, the earnings structure in our profitable markets continue to improve. Furthermore, APAC and LatAm turned positive on adjusted EBITDA level in Q4 before group cost. You will also see later in the presentation that we substantially improved the performance of our unprofitable countries as well as integrated verticals. This puts the business in a very strong profit trajectory for 2024 and beyond. We are proud to have achieved this without having to sacrifice growth or market position. In most markets, we have even gained substantial category share. Last but not least, we have finally reached cash flow breakeven during H2 2023, which implies a free cash flow uplift of EUR 330 million year-on-year in H2, an improvement of more than EUR 600 million compared to full year 2022. Again, we have achieved this while still maintaining our clear category lead in most of our markets. Our clear category leadership, combined with our strong profit trajectory and positive free cash flow outlook puts us in a comfortable position to repay all debt maturities organically. We have also had a very good start in 2024. If we then move to Slide 4, I think it speaks for itself. But our top line growth was driven by strong order development in most of our segments. And again, the growth was delivered while still delivering substantial profit and cash flow improvements. If you take a look at Slide 5, you can get a very good understanding of where our growth is actually coming from. Last quarter, 4 out of 5 segments were generating revenue growth of between 15% and 26% year-on-year in constant currency and excluding hyperinflation accounting. Now let me hand over to Emmanuel, who will give you a deep dive into the financials.

Thank you, Niklas. And also a warm welcome from my side. Well, let me start by recapping our achievements for the past year, which really was a landmark for delivery year. We delivered on all the ambitious guidance parameters for 2023, which we, in some cases, even raised during the year. We already announced during last week prerelease that we delivered on our guidance for GMV revenues, adjusted EBITDA and free cash flow. And we achieved this despite FX headwinds and hyperinflation. Today, I would like to shed some more light on additional guidance parameters that we are digitally reach. First, around 75% of our platform business was profitable in the full year 2023, with a profitable platform business generating an adjusted EBITDA run rate of more than EUR 1.3 billion in Q4 2023. And meanwhile, the adjusted EBITDA of an unprofitable platform business has bear full year 2022 grouping, performed ahead of our initial expectations, showing a fast than expecting reduction of this negative adjusted EBITDA contribution, reaching an adjusted EBITDA margin of around minus 1.4% in Q4 2021. Also, the adjusted EBITDA for our integrated verticals performed better than expected and improved by around 60% year-on-year in Q4 2020. Naturally, as we have already shared before, Dmarts, which accounts for 95% of our [indiscernible] in terms of revenue, reached positive gross profit already in June 2025 and for the entire second half of the year. So now let us dive into the performance of our individual segments. And we start with our MENA segments where we continue to see great momentum. We post growth, strong GMV growth of more than 20% in Q4 2023, excluding the impact from hyperinflation, and this is driven by the strong growth in orders. Our commitment to deliver an exceptional customer experience bear with a flawless execution have been pivotal for our growth trajectory in the region. And moreover, this enable us to strength our foothold in key markets as we continue our category share leadership. Additionally, our presence in early-stage markets like Egypt and Iraq, is getting momentum over the past year and so we are very pleased with the developments in [ churn ]. It's also very encouraging to observe our great achievements in profitability. The majority of our markets of the segment already operate and adjusted EBITDA to GMV margin above 5% for the full year 2023. And this is including all central costs and already within the long-term margin range of 5% to 8% for the group. The MENA business has also shown outstanding development areas other than profitability. And here, I would like to highlight that in Saudi Arabia, for example, where a new logistic regulation will come into force in 2025, we already delivered the vast majority of our orders in a legally compliant way ahead of a new legal requirement, as we played for people to roll during the process, working closely with the local authorities. But we will be fully compliant with the new regulation long before it comes into force. Now let's move to Asia on the next slide. As you are aware, the overall top line development in Korea is still influenced by the normalization of post-COVID and also the hypergrowth experience over the past 3 years. Also, the competition intensified over the last 24 months, in particular, last year with Coupang Eats launching the subscription program. But despite this aggressive offering of Coupang Eats was almost the same category share as 2 years ago. Our growth in South Korea was normalized and our GMV declined 2% year-on-year in custom trends in Q4, but accelerating December has continued also well year-to-date. Our revenue growth in South Korea is very strong with double-digit growth in Q4 and full year 2023. Our OD share has increased by 6 percentage points year-on-year national-wide and we reached an on-delivery share of 21% in December. And in the capital sale, we already have today an OD share that is exceeding 60%. Turning to APAC. We still see customers adapting to more targeted promotion after a phase of heavy battering across the industry. And moreover, we put a strong emphasis on improving our unique economics in the region. And this has led the APAC business into adjusted EBITDA breakeven, excluding group cost in Q4 2020. And since mid-November, we've seen our business picking up in growth. So now moving to Europe on the next slide. Again, Europe continues to perform very well. The GMV is up 16% and revenues is up by 20% year-on-year at constant currency. Our growth has further accelerated in 2024 even. Within the segment, global performed above the average terms of GMV and revenue contribution. And Glovo also reduced adjusted EBITDA burn by around 60% in 2023 compared to the previous year and even faster than what we initially expected. As you foresee this trend to continue in 2025, we were at a similar pace. So now moving to Americas on the next slide. GMV and revenue both grew by 15% in constant currency and excluding the hyperinflation adjustments for Argentina that we had to reflect in the last quarter, in Q4 2023. For GMV, these adjustments were about EUR 550 million and for revenue, about EUR 130 million in this quarter. Overall, we are very happy with the performance in the region, adjusted EBITDA burn for the full year was down by more than 60% also. And looking at the current numbers, we see macro uncertainties impacting the year-on-year GMV growth in Europe currency in Argentina, while the rest of the region is growing strong double digits. But we remain cautious for the coming months due to the uncertain economic outlook in Argentina. And now to our integrated vertical on the next slide. So here, the segment generated strong GMV and revenue growth of 24% in constant currency and excluding hyperinflation adjustments. Unique economics are further improving in line with the strong gross profit development. The gross profit margin were actually growing above 100 basis points quarter-over-quarter in Q4. And with regard to our global footprint, we're currently around 932 Dmarts in Q4, which is only 3 stores less than in Q3, but almost 300 less than in the same period of time last year, including the global stores. So we reduced it by 300 compared to last year. We still work on optimizing our footprint and expect to combine or close around another 50 stores in 2024. Also, during 2023, we closed the majority of our kitchens within the group with the exception of MENA, where unique economics and benefits to the platform business like inventory are very positive. On a full year basis, the segment is now gross profit positive. Adjusted EBITDA improved by over 40% year-on-year and the burn is reduced by almost 50% compared to 2020. Also, we expect this positive trend to continue due to the improvement of the unit economics and to grow the numbers of business per store. Now on to the gross profit margin on the next slide. The gross profit margin of the platform business reached close to 8% in the quarter, which represented an increase of 2.5 percentage points since we started our push towards profitability in the beginning of 2022. MENA, Americas and the APAC region led the group in terms of gross profit margin and are already above 10% with delivery CPO optimization across this region driving quarter-on-quarter margin expansion. And even if it's still some way to go to achieve our long-term margin target of 10% to 13%, we can clearly see that we constantly increase our gross profit margin across their entire platform business. And although not on this graph, I'd like also to share that integrated verticals continue to perform very well and reached gross profit margin of more than 3% this quarter, so in Q4. And this is 8 percentage point better than the same quarter last year. Integrated verticals will continue to ramp up nicely during 2024 with gross profit margin projected to almost double towards the end of the year 2024. The positive development in the group, gross profit margin is also supported by the rollout of our AdTech business, in Q4, our noncommission-based revenue or in short NCR amount to 2% of the group GMV. So now let me give you an update on the liquidity on the next slide. At the end of H1 2023, Delivery Hero had cash and cash equivalents in the amount of EUR 1.9 billion. In H2, the group reached free cash flow breakeven during the second half of the year and generated a total free cash flow between 0 to minus EUR 1 billion in H2. This was driven by an adjusted EBITDA of more than EUR 240 million positive, a CapEx of about 6% to GMV, leasing up to 3% of GMV and tax above 4% of GMV and also a small inflow from working CapEx. The net interest amount to EUR 70 million in H2 and EUR 120 million a year in full year 2023. And we had also another about EUR 0.1 billion of earnout from previous M&A. So putting everything together, this brings us to cash and cash equivalents of EUR 1.7 billion at the end of the full year 2023. Of this EUR 1.7 billion in cash, exactly EUR 2.2 million, so EUR 2.2 million were restricted. Also the amount of cash located in hyperinflation countries like Argentina or Turkey were less than 3% of the group cash. So now let's move to the next slide where we lay out our future cash flow generation. To be clear, we're not going to provide formal cash flow guidance until [ 2028 ] on today's call, no detailed [indiscernible] for confidential reasons. But we still want to give you a better understanding on how future cash flow trajectory. What you see here is a simplified view of the fundamental factors that will determine our cash flow position over the next few years. And as you can see, we have sufficient liquidity buffer to cover all the maturities until 2028 beyond, and this is true regardless of the time periods selected. So we are not including potential efforts from effects on M&A or refinancing. And I mentioned in the past, we will consider the potential investments of liquid investment as part of our capital allocation trajectory, M&A lies beyond our control, and therefore, we don't rely on it. Refinancing can only improve our cash flow position and excluding it makes this year even more conservative. So we start the year 2024 with a EUR 0.7 billion I just mentioned and unrestricted cash and cash equivalents. This was also before the repayment of the 2024 [indiscernible] in the amount of EUR 287 million and before the investment of the real estate in the amount of EUR 140 million. Then we project our levered free cash flow from 2024, 2028 based on the GMV [indiscernible] growth substantially below our long-term ambitions until 2028. And we also took a rather conservative view on adjusted EBITDA margin expansion, getting close to our guided range from 5% to 8% long term by 2028. So this expansion will result from GMV growth and the continued advancement of our gross profit margin, coupled with a rigorous and disciplined review of our country portfolio and operational efficiency. The country portfolio review is a constant exercise since the creation of the Delivery Hero. And I won't list all countries that we invest over the last 10 years, but Germany is probably the most prominent one. And the search for more efficiency in organization includes the allocation of our human and financial resources. A good example is surely the 35 platform migration perform over the last 10 years with the [indiscernible] migration in May 2022 being the latest. Hence we believe that it's generally healthy but reasonable expansion of adjusted EBITDA margin on a yearly basis. And we have plenty of levers to expand this margin faster if we require. Now adjusted EBITDA to free cash flow bridge is based on the previous long-term guidance, which is also on the next slide of this presentation. We have taken also here a conservative approach in terms of below the line optimization of the spending. And in addition to the above, there are various measures at our disposal for effective cash flow management. There's a range of measures that we could implement to unlock hundreds of millions of additional free cash flow and these actions have not been accounted for in this review as they do not optimize for long-term value. I'd like to emphasize something here. I'd like to emphasize our commitment to constantly evaluate our portfolio. We not hesitate to engage in further portfolio rationalization or pursue additional efficiency gains in operation. And this approach have been instrumental in sufficiently altering the financial trajectory of the company in recent years, and we are dedicated to continue on this path in the future. So now on the next slide, where we take you through adjusted EBITDA and cash conversion in more detail. Our gross profit margin expanded by 1.4 percentage points in 2028, and we expect it to continuously increase over the coming years between 10% and 13% by 2030. We reached this through a mixed effect of increasing AOVs, growing high-margin advertising revenues, service fees, order stacking, priority delivery fee and also improving profitability of Dmarts. And at the same time, we work towards enhancing our marketing efficiency and strict cost control, improving our operating leverage. And as you can see, we already reached a long-term target for marketing spending as a percentage of GMV in 2024. As the markets mature, we believe there is further room for improvement as our best performing market operates very efficiently with marketing spending offering around 1% of GMV. In 2023, we once again increased our adjusted EBITDA margin by over 1 percentage point. And our guidance for 2024 assume another approximately 1% point margin expansion. Going forward, the way we operate the business and the combination of continued gross profit margin expansion and operating leverage should result in continued adjusted EBITDA margin expansion. Now looking at the lines between adjusted EBITDA and free cash flow. For CapEx in 2023, remain at 6% of GMV as we build a few fulfillment centers and had to expand some of the local office as we return from the work from home environment. For 2024, we expect a stable development of our CapEx, resulting in a slight decline as a percentage of GMV due to investments in fulfillment centers, location and optimization of some Dmarts. The vast majority of our CapEx in 2024 will serve growth and optimization. Obviously, CapEx are in our control in terms of decision and in the long term, CapEx to GMV improved to around about 3%. Now working capital, which as a result as a small cash inflow during the last 2 years, and we expect this to continue going forward. We prefer to take a rather conservative approach but we are fully aware that we can manage our working capital even more efficiently in the future, especially for Dmarts business. The lease payment will continue to grow in absolute terms going forward, but at a slower rate than GMV, which means we will see a reduction from about 3% to around 2% on the long term. And the increase in absolute terms is linked to the current lease contract with terms and conditions linked to inflation development, while we also expect the reduction of Dmarts' location during the year 2024. Tax paid, which are preeminently income tax will be lower as a proportion of generated EBITDA but higher impact as proportion of GMV as we continue to increase our earnings. In the early years of delivery year, we have continuously for sure to meet opportunities that are here to improve the tax efficiency in our portfolio, introducing, for example, transfer pricing agreement back to 2014 already and improving it since. And also not part from the free cash flow, but we also would like to give visibility on our thinking in regards to share-based compensation. This share-based compensation represent around about 5% of GMV in 2023, well below the average of our industry. And for 2024, we expect the ratio to remain more or less stable. Long term, we now expect this position to be around that 6% of GMV. So let me now hand back to Niklas, who will take you through our case studies.

Thanks, Emmanuel. Another topic we would like to update on is our progression on advertising. Since you all know, we are monetizing our platform's audience through different ad products, which enables our restaurant partners to improve the visibility through various products. First, premium placement as well as Joker product were our best selling and performing products since we started to ramp up AdTech. We are strong believers in the AdTech business and see high potential for growing it even further. If you look at 2023, we are close to EUR 1 billion here with an uplift of over 60% compared to the previous year. Our long-term target remains 3% to 5% of GMV, and we have reached the lower end of this already in some regions, where in others like South Korea, we are gaining good traction but also have good reason not to rush it too much. Next slide, cover our path to profitability. Starting off with our profitable countries in the platform part of the business. We achieved an adjusted EBITDA run rate of more than EUR 1.3 billion in Q4, 2023, which is approximately 4% more than the same quarter last year, or 2022. We compensated for FX swings and other events outside of our control and still delivered on the guidance we gave in the beginning of 2023. We expect to continue the growth of adjusted EBITDA in profitable countries in 2024 despite the EUR 100 million to EUR 150 million investment in South Korea this year to drive own delivery and other products to be launched during 2024. Please do keep in mind that this investment range is already reflected for in our adjusted EBITDA guidance for the year, and we anticipate realizing the returns of this investment in South Korea starting from 2025 onwards. Now on to the next slide for the update on the development of the unprofitable part of the platform business. So on this slide, you have the unprofitable platform business and we started showing some light on this in Q3 2022 trading update. And back then, it was approximately 35% of our GMV coming from these countries. We maintain the grouping of countries consistent to demonstrate the progression over time on a proforma basis. We have made significant strides over the last 2 years and achieved a negative 1.4% adjusted EBITDA margin in Q4 2023, including group cost allocation. This performance not only exceeded our guidance for 2023, but also established a foundation for success for the years ahead. And now on to the next slide, I will touch upon the integrated verticals. So significant efforts were dedicated to optimizing the operations of integrated verticals during 2023. Notably, we streamlined our Dmarts footprint by closing over 200 stores, discontinue our kitchens business, [ Asramina ], and persistently explored strategies to enhance overall business efficiency. Despite these initiatives, we grew GMV and with 24% year-on-year. These initiatives also enabled us to exceed our initial guidance of halving the losses year-on-year in Q4 2023. We have achieved a 60% year-on-year improvement in adjusted EBITDA in Q4 2023. Next slide summarizes all profitability improvements on a group level. And as you can see, we have made tremendous progress over the last 3 years as we executed on our rational growth strategy, emphasizing profitability, cash generation and disciplined capital allocation. We have improved the adjusted EBITDA margin to GMV with 3.5 percentage points from 2021 to 2023, reaching a margin of 0.6% for full year 2023. Our adjusted EBITDA guidance for this year is in the range of between EUR 725 million to EUR 775 million. When considered in conjunction with our GMV guidance, this implies a midpoint margin forecast of 1.6% for 2024. This would mean more than EUR 1.8 billion uplift in adjusted EBITDA in absolute terms since 2021, while still achieving clear leadership in the vast majority of our markets. Moving forward, we will continue enhancing margins gradually working towards achieving our 5% to 8% long-term range. Simultaneously, we expect free cash flow to grow substantially in the coming years. Now I'll turn back to Emmanuel, who will give us his take on the guidance.

Thanks, Niklas. So for the full year 2024, we expect the GMV growth to accelerate to 7% to 9% year-on-year. And the total revenue for the segments are expected to grow even faster by 15% to 17% year-on-year. The growth rate for GMV and revenues are in constant currency and excluding the effects from hyperinflation accounting. In addition, our gross profit margin will continue to expand further, which result then in adjusted EBITDA guidance range between EUR 725 million and EUR 775 million, which ultimately translates into a positive free cash flow before interest payments. And let me make one thing clear at this point. This is only the beginning as we are building a highly profitable and cash generating business by focusing on scale and leadership. But before we go into this in more detail, I would first like to give you a better understanding of the planned earnings performance in the individual business segment. So now with Europe, we expect slight acceleration in GMV growth and a further material improvement in adjusted EBITDA. Glovo successfully managed to reduce their losses from EUR 300 million adjusted EBITDA in 2022 to less than EUR 150 million in 2023, and we expect this strong momentum to continue in 2024. We therefore expect Glovo to be around breakeven in Q4 2024. In MENA, we expect to maintain our GMV growth and further earnings increase. And given the already strong EBITDA margin increased by 1.5 percentage points in 2023 in our plan a rollout of one delivery in Turkey, which will initially weigh a bit on profitability, we would expect a rather moderate margin EBITDA expansion in 2024. For 2025 and beyond, the margin expansion rate should continue. In Asia, we are planning with a low to middle single-digit GMV growth in 2024 and further margin expansions resulting in a material uplift in adjusted EBITDA. And this already includes EUR 100 million to EUR 150 million investment in Korea, as Niklas mentioned just before. And despite the economic uncertainty in Argentina, we forecast around 50% GMV growth in the Americas segment. This is driven by healthy customer demand and order volumes. In addition, we expect to reach adjusted EBITDA breakeven, including group costs in H2 2024. And last but not least, our Integrated Verticals business will continue to generate significant top line growth. And following the streamlining of our footprint, we expect GMV growth to accelerate to above 25% year-on-year and with a material uplift in gross profit, the best EBITDA burn should have. So now we look forward to taking your questions. Christoph?

Yes. [Operator Instructions]. So now we can start with the Q&A.

[Operator Instructions]. Our first question comes from Joe Barnet from UBS.

Excellent. I'm going to kick off with one on the Korean incremental investment, the EUR 100 million to EUR 150 million. Is that what you expect to spend given current levels of coupon competition? Or is it based on an expectation of an increase or reduction from current levels? Just trying to think how we should understand that upside risk or downside risk going forward. So a little bit more color around that would be great.

So we don't plan our business so much on what coupon base does or not do -- I don't know, we will have to assume that competitive intensity remains as it is right now. And our focus here is to continuously improve our value proposition for the ecosystem. The investment is in this period. While, of course, we react to Coupang Eats and Jockey for that sake we focus on our product and services that will bring value to the restaurant customers and riders. So the investments we do, we think, have a very fast payback in example of own delivery, it costs to expand this fast but over time, we have proven that the margins of own delivery orders are better than for the marketplace. So therefore, when I say here, it costs to launch and push it and expand it fast, and we are going to expand it fast, but you very fastly also have the benefit of this through higher margins and better customer experience. There are a few other products that we want to launch. We keep it still confidential what those are and when we're doing it. But I think we are fairly confident that we can get Korea back on decent growth over, I don't know, '24 and beyond. And I hope that we can regain some of the percentage point share that we actually did lose, of course, from a very high basis. And I think if you look on a 2-year horizon, we haven't really lost share, but last year, we did lose some and I hope that the initiatives are pushing here should hopefully have a good return for us and our customers.

So we can assume some form of ongoing competition at current levels. Is that right? And are you willing to tell us what decent means with regard to a growth trajectory?

Yes, I think we will have to assume that the spending continues. I don't know if it's sensible or not, we can all argue about that. I think overall, if you look at the customers and also external research that we do, customers do claim that we have a better experience that we are the preferred choice, we are the home for the customers. But of course, if we get a good discount, they from time to time also go to another platform. So we know the quick return of promotions and discounts, we have seen it many times over. It does give a clear boost in orders but it's not very sustainable. So I think the most of that boost has already happened, that happened during the summer. I think since then we haven't seen any change in -- and I see all in many other areas in terms of market share and the uplift there. Of course, the launch into new regions where they, of course, also got some orders but also there, we start to see the normalization of events. If they would pull back on promotion, of course, that will be positive but that's not part of our plan. We would have to assume that we keep on the spending regardless if it makes sense or not. And in terms of growth, look, I've said in the past, I think if you look at the cohort behavior of our customers, it's still improving over the years. We also have customers, keep acquiring customers. We, of course, had a temporary decline in frequency as we came from COVID years, we grew our business at 3x during that time, pre-COVID to the peak of COVID. So of course, just maintaining that size, I think, was a big achievement, but generally speaking, our cohorts keep on improving from pre-pandemic levels, higher and will continue to be higher and as cohorts mature, they get more frequent. So based on that, we should continue to grow in frequency as well as we still have a lot of customers that we haven't acquired. So there is still plenty of room on the acquisition side. I think I've said in the past, we should be growing between 5% and 15%. And I don't want to give now specific guidance here in Korea, but it should be -- our ambition is, of course, the 10% to 15% and it would be disappointing for us to be growing this business more like 5% to 10%. So we hope in the higher end. I should also add here that we also expand our Dmarts business there or Dmarts what is called there. It is doing really well, economics are good, but it's still a very small part of our business. The same but our quick commerce overall, still a very small part of our business, doing well, but small part. And we think if we can expand that similarly to what we do in other markets, then we should be able to grow this significantly faster than at least the lower end of that 5% to 15% long-term growth rate. When we reach that -- yes, I hope we reach that range sooner than later.

Our next question comes from Miriam Josiah from Morgan Stanley.

Just one on Glovo. Just wondering if you could give us an update on the on-balance sheet and off-balance sheet liabilities for the provision. I just wondered if you had any more visibility on when or if that might become a cash outflow this year? And if there's any sort of key dates or anything around potential core proceedings or anything that we should be aware of for this year?

Sure. I think I covered that [indiscernible]. So on the provision, I mean, like we are part of the Glovo rider reclassification is for the slot, and we have this already in the balance sheet or our P&L, so this is provision. I think you're more focused on what we call the flex and the contingency. We remain of the opinion that this is still a contingency that basically our systems that you put in place is completely compliant to the Supreme Court decision that was taken 2 years ago. So that's what I can say from the reclassification of the riders. This is our opinion and on the contingency. In terms of cash outflow, we also indicated that part of their slot fines, the vast majority actually is covered by guarantees, bank guarantees that we give, which is part of the RCF. So we didn't draw our RCF, but part of it is reserved for bank guarantee line. So that's, I think we do take the status quo today for the right topic concerning slots before the Supreme Court and the Flex model. And in terms of Flex, maybe I should -- because you ask also cash outflow. So on the Flex model, we do think that this is going to take quite some time to go through the legal workflow of work process in Spain. So it's not going to be any impact for this year and actually, because of our position, where we think we're completely compliant as of today, we think that this is still a contingency.

And I think overall, we hope to give more clarity of the spend situation in, let's call it, short term.

Our next question comes from Andrew Ross with Barclays.

I wanted to ask about the logic as to why you sold Delivery in January? And I guess in that context, there seems to be some concern out there in the market on your liquidity. So could you just talk a bit about the parameters around the current liquidity the group has? Like obviously, the headline cash of EUR 1.7 billion is a big number. It's helpful, you've given us the restricted cash and the percentage [indiscernible] in hyperinflationary countries. But can you give us a bit more about the minimum liquidity threshold of the group needs? How much cash you need in Germany, cash polling agreements that you have as much of the moving parts behind that as you could to help reassure people around the current liquidity position?

Sure. So maybe I'll start with grand then Emmanuel, you can cover the cash side of the question. So we're constantly reassessing our investment in [ the group ] as it did not have the strategic logic as when we acquired it. I, therefore, don't think it should come as a surprise that we sold at the stake. In terms of timing, when we started to sell the stock was above 130 tons and more than 4% up from a year earlier and also clearly above also the tender offer. We could obviously not participate in the tender offer with a small scale as our notification would have triggered pressure on their stock. Therefore, we had to wait until after the tender offer. I'd also like to add that only the last 4% was at a discount to the earlier tender offer. So unfortunately, it was a little bit lower price than the last 4% that we have to do as an ABB rather than dribbling out so therefore, lower price than the last 4% of that stake. Emmanuel, on the cash and liquidity and minimum.

Yes. So I will cover for example, if we start to the minimum cash because I think this is what -- but you also recover so cash upstream, cash pooling and so on and so forth. So the first thing that I also said in my before is that I would like first to clarify that there's almost no restricted cash in our business. I said this before, this number is only at EUR 2.2 million at the end of the year. So restricted cash, very, very low, nothing compared to the total. So restricted cash and potential minimum cash required to operate the business, obviously, 2 different things, but I wanted to clarify this. On top, there are no material markets with restrictions on capital movement. So there is not really any trapped cash within our group. And I mentioned before, so like if you took countries where you do have hyperinflation and here today in our portfolio, this is Argentina and Turkey, first, they are not positive cash flow generator as we speak, and they represent less than 3% of the total cash that we have in these countries. We don't have a defined minimum operating cash number, if you wish, that we use to steer our business but we do have a minimum cash on balance sheet that we need to have and this amounting to EUR 800 million, as you know, as per our revolver credit facility documentation. With that said, I mean, we could operate our business with a lower number, much lower than that, but we don't foresee in our cash position to go anywhere close to the defined EUR 800 million cash providence, given our substantial free cash flow generation that we've foreseen for the years to come. That should also, as I mentioned before, exceed all our combined maturities. You also mentioned cash pooling. So we do have cash pooling solution in place at regional level today. So we do have a cash flow solution in Europe. We do have a cash flow in Asia and on and so forth. And we manage them and this is managed more at the regional level. We don't have any limitation, as I mentioned, restriction whatsoever to upstream cash. I will say there is 2 countries, to my knowledge, well, you do have limitation for obvious reasons. Let me list them for you, the first one is Ukraine, I mean is understandable. They are on the war and there is no way that you can upstream the liquidity or direct cash. The second is Pakistan. I think that's also Egypt, but I'm not quite sure. But overall, as you can feel, this is countries that are from the newer currency, not heavy and lately, one of those or 2 of those are not also positive cash flow generated. So overall, I would say, limit a restricted EUR 2.2 million, trap, none and basically some limitations for 3 minor market. Then I mentioned cash pooling minimum cash. I think you were asking also about the cash at the holding level, so what we have at central. This amount of cash at a holding company at given times vary so it can be misleading also depending on the frequency of upstreaming that I just mentioned and also the amount of buffer that we give to the local entities. But that said, it can fluctuate quickly. And this is also important that again, to remember that we have a very, very low restricted cash. I hope that covered -- I mean I was noted minimum cash, cash upstream, cash pooling, hyperinflation. Did I forget anything?

That's extremely helpful. Can I just clarify from Miriam's question, that part of this bridge there's not expected to be any big cash outflow related to Glovo this year? Just to confirm as what you said, just to complete this conversation.

That's correct. No replan for the investments or M&A transaction in this cash projection. And indeed, we didn't plan any cash outflow for the flex part, right?

And maybe add there at EUR 800 million covenant is before RCF or unused RCF, I would say. So the actual amount is actually lower than EUR 800 million.

Our next question comes from Marcus Diebel with JPMorgan.

Very helpful as so far. Just one more on the cash again and maybe for Emmanuel. Clearly, you sent a very confident message on future cash flow until 2028. I think when we just look at this bar, we get to like north of EUR 5 billion without just taking it guidance but I would say a very confident message. But how do you think about potentially your financing? I understand M&A is something you can't talk about on this call and for these reasons but on refinancing, I think it's interesting. I think the shares are obviously at low levels, partly because of their balance sheet concerns, rightly or wrongly, you gave again a constant message. But how do you actually balance options on refinancing and potentially positively impacting the share price versus the ability to repay almost organically all the debt that is coming up? How do you balance these 2 things? That would be quite interesting, and any comment on this would be very helpful.

Well, I mean, if you look at what our status, we do not require any additional financing to operate our business today. And however, we always monitor the current market. And as we said before, I mean, we always are act in the interest of the investors. We want to make clear here that in avoidance of any doubt that we already any sharing capital increase or other equity-linked products at the group level at the current share price. So I want to make it pretty clear. We have ample access to highly supported net capital markets globally. We have close dialogue with our debt investors and those investors has continuously express interest to invest in our debt should be there another transaction in the future. We also receive in bonds from investors expressing their interest to embed directly in some of our American entities. So theoretically, this would be another pocket of capital that we could tap very quickly if we desire to do so. But having said that we don't need any external capital to run a business, as you've seen today. And we would only engage with the debt refinancing transaction if this is beneficial for us and for our shareholders and also in line with our efficient but also basically prudent long-term capital structure. And for that, we will only evaluate because I mentioned this just before, minorities stake sale locally if it would have a broader strategic logic, but also create the shareholder value compared to the current status. So I hope I answer fully your question here.

Yes. I just wanted to get your thinking maybe given you mentioned this, so you haven't sold any other minority stakes like Just It all or anything else just to round it up?

No. We didn't.

We did not sell Just It stake, no, but we have stalled minority shares and we have sold, not in this quarter, but of course, in the past, we sold the majority of our rapid stake at a big profit, by the way, at a multiple return there. We still have a very minor stake left there that may be sold and there are also a few other stakes. We also saw Just It stake in the past, so this was back in 2021 or so. I think we saw that EUR 80 million, EUR 85 million, EUR 90 million, or something like that, also with a very high return. Same is also Mato with a very good return that we also guided as part of a transaction. And we probably also sold some other stakes also with good returns. I understand that the delivery has not been a good return but I think given the current environment, I think -- yes. But we have not sold the last part of our Just It stake.

Our next question comes from Chris Johnen from HSBC.

Also from my side, so coming back to a point, Emmanuel, it just made with respect to the options. I understand this year has lots of, frustrating for a lot of people. It signals weakness. So with respect to the point that you mentioned, the potential to maybe get an outside party in as a minority investor in some of the assets directly. I mean, how are you balancing that? I mean how much of an issue is the share price in your view and knowing that you -- I think, made very clear today that the refinancing is probably not an issue that you see no pressure to sell the APAC business, but I mean what criteria would have to be met for you to consider selling a minority in an individual asset, maybe even a segment? I'm not sure how much you can say on that, but I think that will be interesting.

Sure. So again, like the projection that you've seen today, that's very important. The green bar indicates our organic cash flow projection until 2028. So we don't need, in this plan that we have, you don't need any proceeds from any sales transaction, any stake disposal. And you will have truly notice that we didn't also highlight our RCF. So basically, we based on things that we can control on our business development, things that we can push decision that you can make. So it's very important that this is clear. So what we did mention about minority stakes, and we will think about it, you have to be more than cash, so cash is important, don't get me wrong. I'm the CFO here. So cash is one element but you have to be also a value. If we sell a minority stake in the future, you have to be value creative from the business point of view. We like to see like a value for not only in the financial value, but a business value. So they have to be more than just a cash, if I may say so. So that's our thinking. As you know, in our portfolio, we do have extremely, extremely attractive business, the regions like me, the profitable business that we have, so there is interest. There's interest from partners and from stakeholders and for us, we will always think the financial part of it, which is important, the valuation and everything, but much more, as I said before, the partnership. What do we get out of this minority stake that we would potentially consider to sell, what will be the benefit for the business beyond money.

And if I may ask how long or how far long are those talks at the moment? Is that something that could theoretically happen shorter term? Or is that -- I'll take any color.

Obviously, I can't comment on the time line but this conversation I would say, are almost undergoing, especially like for business that are obviously proven that they are highly profitable, where the brand awareness is very high, where the local population identify itself to the brand very strongly. You can imagine that this conversations are ongoing.

Perfect.

And of course, it's also very painful for us. We understand that anyone who bought into stock has not made a good deal and that is painful for us. So yes, it's not nice and we don't like it but in the end we can only control our execution, and I think that we delivered on that, and we will continue to deliver on that, and I hope that, that will also overtime reflect our share price. And it's sounds here as we commit to minority stake sale, we keep on ongoing discussions. There's an immense interest in it, doesn't mean that we're going to do it. We need to see strategic value from any investments. And so yes, I think you also mentioned in that note, again, on food panda or you mentioned Southeast Asia in the question. So again, this is nothing that we need to do. We have a super attractive portfolio of countries in Southeast Asia that will contribute tremendously to growth over the coming years. In Q4, we were already turned a full APAC [ win ] breakeven for group cost. And that means there's no longer a drag on our EBITDA. And it doesn't mean that we are not -- we're still evaluating. We constantly evaluate our country operation, and we have done selective divestment in the past, either when the synergy value for another part, it could generate more value than for us such that there is an attractive price or more so than for us to continue operating. So therefore, by no means are we in a position where we have to sell, we would only sell an asset, and this doesn't only go for Food Panda, this could also be other discussions with other partners. We would only do it if the value is larger than where it is for us to keep operating those businesses. And I think the Southeast Asia, I think, we have tremendous growth coming, we also have a very strong global business. I think we are multiple times larger than any competitor in the region and we are way more cash flow generative than anyone in this region. Therefore, I'm most confident that our overall position is only going to get stronger from this point onwards. So by no means a must for us.

Our next question comes from Giles Thorne with Jefferies.

It was a question on Korea, please. Latest development suggests that you're going to be falling outside of the Fair Trade Commissions Platform Act. But Niklas, it would be useful to get your perspective on the direction of travel there. And then also just any color or thoughts on how good key Internet is as a lobbying body on your behalf in that country?

Yes. So we like to fall outside of that category but I think it wouldn't really make a big difference. So basically, what is as is should not abuse or monopolistic position, which we don't do in either way. And we operate in a very compliant, taking advantage of our size in any way. And I think there's also clear evidence that someone who invests money can come in and enter the market. So even if we would be covered by that act, I don't think it would make a big difference to our operations or none at all for that sake. And of course, we have very strong relation and connection in the Korean scenes, so we make sure that we operate compliantly and in the interest of the ecosystem. That's extremely important for the founder and for us to act in a very positive spirit in the Korean market.

Our next question comes from William Woods with Bernstein.

I suppose if you're very convinced in the ability to manage the debt maturities, why aren't you taking advantage of the discount in the convertibles and buying back some of the debt?

I mean, obviously, we have to -- as the cash flow projection we improve year after year, we will consider this for sure. I mean we did this in the past, considering this and this is basically a decision that we would take as I said, our free cash flow will increase in the coming years. So that's something that we closely monitor as we could take advantage of this. If you remember, we did a tender last year, that was also one of the reason why we took this decision at that time to repay upfront part of the bond when the last the last part of it were paid back in January.

And I think given our size, and we also make sure that we have a sufficient good cash balance at hand. So we also, I think, for prudence, we want to maintain that cash balance. Of course, if there will be either M&A or stake sale or anything else, then I think -- I know the proceed would rather be to strengthening our balance sheet by either buyback, convert or debt. That's the first priority.

Our next question comes from Lisa Yang with Goldman Sachs.

I have a follow-up question on the covenants. So what technically could happen if you go below the EUR 800 million, I think, covenants that you mentioned? And then you clarify that you will take out any unused part. Could you maybe just confirm like what percentage of the RCF currently drawn or used as part of the bank guarantees to cover the liability? I'm not sure if that technically counts as to be able to deduct that from the covenants.

Yes, sure. So the covenants you mentioned, the EUR 800 million that I also highlighted before, which is aligned with our banks that are providing their revolver credit facilities. This covenant is based on our consolidated group cash flow, which is referring under the position, cash and cash equivalents in our financial statement. So by the end of the year, this was amounting about EUR 1.7 billion, as I highlighted before, of which we have to deduct the restricted cash. I mentioned also in just a few minutes ago amount -- this is amounting by EUR 2.2 million. So which we almost not consider this. Just for your information, it was EUR 1.9 the year before, so this is like at the same level. We also can add our RCF. So the RCF undrawn is EUR 480 million of which EUR 240 million -- roughly EUR 241 million have been used for bank guarantees. So today, we could draw EUR 240 million from the RCF. So we can add this RCF, but we have to deduct the guarantees. And we don't have to do any adjustments for -- because I heard this for restaurant cash or whatsoever. So overall, if you add the EUR 1.7 billion plus the part of the RCF that is available, we have like almost like, yes, almost EUR 2 billion of liquidity versus the EUR 800 million covenant. So it will be very hard for us, especially after the trajectory that I just mentioned today in terms of EBITDA improvement, free cash flow improvement to be very difficult to treat our covenant of EUR 800 million. And obviously, this is yes. Sorry, Chris, you want to...

Please?

No, I wanted to say that this EUR 800 million have been defined together with the banks based on the financials. So this is also like it is not a covenant -- I mean this is a very important part of their coming together for the ACF. Niklas?

Yes. And by no means, we will ever get even close to that amount, as Emmanuel also pointed out. As I said, this EUR 800 million minus RCF that's unused, so the amount is even lower. So by no means will we ever get even close to that. And we are cash flow breakeven this year, yes, there's EUR 120 million of net interest payment approximately last year, assuming similar this year. So we are clearly cash flow positive, including an interest payment as we go into the second half of the year and quite significantly so. So by no means will we ever get close to those covenants, that I can also guarantee.

Our next question comes from Jurgen Kolb with Kepler Cheuvreux.

Yes. On a different note and subject, the Dmarts business seems to be continuing to grow extremely strong in spite of you closing and closing down stores. So maybe what is the winning formula that you found to make that business such a strong growing business? Is that something also where you would consider maybe opening up for a minority partner in that overall business in order to maybe to boost it even further?

Yes. So I agree. Thank you very much for the question. Yes, I agree, it's doing incredibly strong. The growth is doing very well. Despite the closures, if you look at order per store, GMV per store and so on, we are very happy, and we think that we're only in the very beginning of it. The margin expansion has continued to increase fast. Our AdTech and which we think in that part of the business is rather between 5% and 8%, probably more in the higher end. Yes, we started, we are used in a couple of percent now. We started only very recently, we're a couple of percent now but we can easily go to the 5% to 8%, hopefully, the higher end. The procurement is also something that is doing better and better and purchasing power. The fulfillment centers also help a lot there to further improve margin and availability and so on. So I think overall, we are super happy. It not only is it very close to be breakeven or we said by the end of the year, we should be very, very close to breakeven there, including overhead and so on and continue to profit from there. And not only is it going to be a very profitable part of our business, but it's also strengthening and giving our moat to our business. So it puts us in a very strong position and the service offering is absolutely fantastic way better than other service offering that we have seen. So that, of course, also strengthening our platform. And if we look at places like Middle East, as an example, the growth that we're having there in our business is despite having extremely tough competition, we are still outgrowing our competitors, both in percentage and absolute terms. And I think part of the reason is that we can have a way better service offering, not only in our food business but also in Dmarts and other areas. So then the question, could you also consider to take in minority investment. I think same as before. I don't know if there are strategic investor of value investors, we can add strategic value, of course, we'll consider. But at the same time, we also want to make ensure that we keep everything simple. We think we have a fantastic business and we are not really in to trying to over optimizing there. We like to focusing on operating our business rather than complicating things. Therefore, I don't think you should expect that. And I think also the fact that we've seen many players failing or building similar to the Dmarts' model with quick commerce, I think this also shows the strength of our platform and our teams.

Our next question comes from Annick Maas with Societe Generale.

So my question is regarding the Southeast Asian business. You made it clear you don't need to sell it, but let's assume you keep it midterm, do you think this will need to have you reevaluate the strategy and maybe reinvest as well in order to remain competitive? Or could you just keep it running as if even though the competition is intensifying over there?

Yes. I don't think the competition is necessarily intensifying. I think the competitors are also driven by driving growth and profitability. So I think that is the name of the game for everyone. For us, as I said, we push profitability very hard to get to this breakeven point to also avoid that this is a drag to our business such that we can sustain it for a long period of time. I don't think that we have to invest more there. I know, as we see growth coming back, we can, of course, reinvest some of that growth but still keeping the EBITDA line flat. And I think that, over time should put us in a better position. I also think what you have seen, we lost a little bit of share as opposed for profitability last year, in particular then in Q4. But we already saw in December, January, into February, I think we've been gaining share again. So as I think the strategy worked out in the sense that we took some of the unhealthy part of the business out and now we see a good growth coming in from that. So I would expect that the Asia business or APAC business will show very good growth. I think it will be a strong growth engine for our business over time. It's probably the least mature segment. And I think that we can keep on reinvesting there to build a fabulous business in that region. And as I said before, we have a clear size advantage versus all our competitors there. We have clear cash flow pools in other parts of our business and APAC is only a small part of our business. So I think we are in a very strong position to become the clear leader in that market over time. But of course, this can take 3 years, 4 years, 5 years. And I also want to make clear, we are very rational people. We sold their home market in Germany, we have sold other assets that have been very key and we are in dialogue. And of course, we keep on evaluating if someone can pay us a price that is above that what we think the asset is worth then, of course, we will do a deal if it is value to the shareholders but again, it's by no means are we in a position where we have to sell. We have plenty of cash, we are moving to [indiscernible]. Maybe we can cover all maturities without any deal or refinancing or minority investments into any of our assets in our profitable entities so we will keep operating and take it as it comes for this region, and this is also true for other regions. I hope this helped.

Our next question comes from Joseph McNamara with Citi.

I just had a quick question on ad revenues. You pointed to a significant increase in ad revenue in 2024, so from the kind of EUR 1 billion run rate that you saw in Q4 to perhaps double that by this time next year. I guess what I'm trying to understand is this the EBITDA flow-through is around 70% and this year's EBITDA guide is to increase EBITDA around EUR 500 million year-on-year. It seems as though pretty much all of that increase can be explained by the increase in ad revenue despite also strong earnings progression in the profitable and unprofitable platform businesses? So I guess, in that context, how are you thinking about balancing taking profit versus making investments in 2024?

Yes. I think overall, our focus is clear, and I think our numbers speak for sale. We are very focused on driving both profit, cash flow but at the same time, we don't want to do it at the cost of our market position. And I think that has also been clear. We have been gaining share in Europe, we have been gaining share in Middle East, we have been gaining share in LatAm. We have maybe lost a little bit of share in Asia as we're in APAC, but temporarily, I would say. But overall, I think we have been able to achieve this while still maintaining growth in a very challenging environment. So our focus remains to drive profitable growth and drive strong cash flow while still being very competitive and driving that growth. And you mentioned a point on AdTech that alone could make a big part of the cash flow generation that we have this year. We won't comment exactly how much we're going to drive our AdTech this year but in general, I think we have many levers to reach our 2024 guidance as well as a long-term cash flow generation. If there's AdTech or there is margin, if there is a premium delivery or if it just growth, just growth by itself as we keep very strict cost control and as we're growing that itself generates a lot of EBITDA. I think, in general, every percent that we drive is something like EUR 35 million to EUR 40 million to the bottom line. So if we grow in the 5% to 7% and a big part of our EBITDA is already achieved by that growth, then additionally that we have plenty of levers, way more levers than what our 2024 guidance implies. And if something goes wrong, well, then they put some other levers, and we get there. And I think that was also clear in 2023, a lot of things went against us. FX moved completely against us and the Euro got very strong, while Korean won and U.S. dollar and so on and weakened, and we made profit in markets with a U.S.-dominated currency as well as in Korean won. So of course, that cost us a lot of EBITDA. We also had hyperinflation. That was, of course, not helpful. And we have a competitor who went in very aggressively in one of our biggest markets that we had to respond to. That was also not very helpful. And despite all that, we overdelivered on EBITDA to what we guided to. And that is just a proof of evidence that if something goes against us in one way, we have plenty of levers in other parts of the business. And the same goes for this year, if something doesn't work out or if something surprising or something happens, we've plenty of levers to adjust for that. And we are gradually going to pull those levers over the next years to come.

Our next question comes from Kiranjot Grewal from Bank of America.

Just building on the question around the ad revenues. It does look like most of your EBITDA in '23 came from that and looking at your '24 targets, it looks like the majority, again, will come from ad revenue. So just outside of that, when do you think there will be meaningful profitability in the underlying business ex to ad revenues?

Yes, I think it's true in the one hand, what you said there that -- I don't think that's true that a significant portion of our EBITDA generation over the last few years, mainly come from that because the profitability increase was EUR 1.8 billion over the last couple of years here, of which AdTech and only contribute to a significant smaller increase in EBITDA and cash flow than that. But of course, AdTech is a very important part of driving profitability, but not the only part. We have other levers, as I said, stacking is probably our largest lever that we gradually pull having, high density of orders and volumes enable us to stack more and that improves our profitability in an enormous way. We also have things like a saver delivery that we're working on, and we have preferred delivery one. There's also ways of improving our margins and also the scale that we're having as we're driving more growth. That also helps bottom line significantly. So as I said, for every percent, we grow there is another EUR 35 million, EUR 40 million into the bottom line. And also, we've spoken but, we have not only kept cost down, we have, in many cases, also taking costs down or flat. They have also taken it down. So there are many levers that are pulling and AdTech is only one of them but of course, this is a very important one because it's one that doesn't impact the customer much and it helps the restaurant and of course, it's also financially attractive for us.

Our next question comes from Silvia Cuneo with Deutsche Bank.

I just wanted to come back to growth. Emmanuel previously for sharing some of the building blocks within the GMV growth. Just wanted to ask if you could please repeat once more, in particular what you expect in Asia for 2024? And related to that, I wanted to ask what acceleration you experienced at the end of Q4 and year-to-date? Just to get us more comfortable with the acceleration targets for 2024.

So in terms of -- you probably refer to the Slide 14 in terms of growth rate for the future, for the years to come. So here, as I mentioned before, we've been quite conservative in terms of GMV growth rate below what we are ambitious or what we guide the market long term. So we wanted to be conservative in our crash for the period of time, 2025, 2028. Concerning the Asian, because you mentioned Asia, what we expect for this year for 2024. Here, we've been also planning a low to mid-digit GMV growth in 2024 for the same reason. We want to be conservative. As Niklas said, we see that the APAC. So APAC, when I mentioned APAC is already including Korea, that APAC region is coming back in terms of growth that we've done to many efforts over the last years, we've been pushing unit economics broadly was impacting on top of the year after COVID, on top of the inflation was impacting our growth rate. But for that now, we have a very solid unit economics. So the growth rate again for 2024 for Asia, so Asia, including Korea, low to middle digits to GMV for the coming years in terms of projection, in terms of cash flow projection that we presented here on Slide 14, this is below as you said, expect or ambitious in terms of growth rate because we wanted to be conservative in our sentiment.

I think you also see the growth coming, you saw every segment there. As we return for COVID, all segments took a little bit of a hit, maybe with exception now growth rate in revenues between is 15% and 26% and also GMV is significant or very, very strong, driven by high order growth. So I think it's clear that every market has come back and so is Asia. So we hope that that's the next one to come. And just modeling also on the cohort frequency increase over time, the acquisition. So we also have a good forecast in how growth will evolve over time based on cohort and acquisitions. That's why Ross has strong confidence that we can grow with our target growth rate. As Emmanuel said, we have not used our target growth rate, but a significantly more conservative view when we look at the cash side because we have to plan on the worst-case scenario.

Our last question comes from Andrew Gwynn with PNB Paribas.

Last time pretty quick. Emmanuel, with the Q3 results, I think you surprised many of us by announcing that you are looking to retire in the next 12 to 18 months. I think it's pretty clear there's a lot going on. So is that a comment that applies?

Yes. I mean this comment still apply, but I want to highlight something. You have 2 guys on this call always. And basically, you have a management and board member, you have managers that are supporting this trajectory. So I think that's very important to know that this is not 1 or 2 mentors or commitment. This is the entire company that is going in that direction. So this comment still apply, but I hope that you feel that my commitment and this achieving 2024 onwards, we're on the trajectory. I mean this is pretty clear. And as I said, this is not a commitment of 1, 2 persons, this is a commitment of the entire company and entire top management. And last but not least, this is our commitment, indeed from Niklas and myself, but as I said, this is really the direction of the company is really, really clear. And we mentioned the share price today. This is also something that we affected by the development, and that's why we want to make sure that we deliver on what we say, not only 2 guys, but the entire company, the entire employees that are working tremendously for us. That's why we all deserve that to deliver on these numbers that we mentioned today and this is a commitment that is not coming from only 2 persons.

Yes. And Emmanuel will not retire from delivery here if he didn't feel that the company is an extremely strong position and his goal was to put also the company in a strong path, on cash flow, on balance sheet and all of that. And it's exactly what Emmanuel said. The commitment from me, PJ and the whole team here is the same. And I think the numbers speak for itself. We have over the last couple of years, pushed EBITDA and cash flow very hard and the commitments we're also giving today going forward stays with the whole company. So that will not change.

Gentlemen, this was our last question.

Then thank you, everyone, for listening in. I know it has been a very painful time for U.S. shareholders. This is not only true for you, but it goes also for Emmanuel, I and the rest of the DH team. Majority of our capital is in Delivery Hero, and we work all incredibly hard to deliver on all our commitments. Our internal KPIs are pointing in the right direction and we strongly believe we have drastically improved cash flow while not compromising growth nor our market position. We believe this should bode out to the future of Delivery Hero, and I can't wait to get there. So again, thank everyone, for your patience.

Thank you very much, everyone. Have a good one.

Ladies and gentlemen, the conference is now over. Thank you for [indiscernible], and thank you for participating in the conference. You may now disconnect your lines. Goodbye.