Prosus N.V. (PRX.AS) Earnings Call Transcript & Summary

Welcome, everybody, to the Prosus 2022 Capital Markets Day. It's great to have you here. Thanks for coming in person and to those on the webcast, thank you very much for tuning in. I can tell what you're thinking right now, "God, I want to really work out for this event." And he is much taller in person, not so much. But I will commend you all for making it here today. In the world that we live in, where it's so difficult to travel and to get where you want to go, the fact that you all got here without getting hit by a bike this morning is absolutely fantastic. And if you look around here, there's a few empty seats. Some of your colleagues did not make it and were not as lucky. So let's just take a moment for them. When we look around this group, we've represented us from all over the world, which is really illustrative of what the group has become. We have representatives from as far east as China, far west as the U.S., far north as the Nordics and far south as South Africa. Where are my South Africans at today? Anyone make some noise South Africa, no? It's 30 degrees in South Africa right now. So they're all miserable up here. So you'll be able to tell the South Africans at the coffee break because they'll all be huddled together like emperor penguins in Antarctica in the middle of a blizzard, so be nice to them. But that's what, I did get penguins in there because penguins are very important to our friends at Tencent, and I wanted to pay homage to them, and I wanted to say welcome Jane, welcome, Wendy, thank you for coming. It's been a bit of a crazy year. And we've done, as a group, what my shrink tells us to do, which is to focus on the things that we can control. So if you look at the things that we've done over the last year-plus, we've had the deep dive sessions earlier on in the year to give you a little bit better view into the businesses and today is a combination of that. In July, we announced the beginning of an open-ended share repurchase program. That's creating meaningful value and I think it will leverage our future returns, and you'll hear more about that from the team today. And about 2 weeks ago, we as a group committed to e-commerce aggregate profitability by 1H '25. And each one of the team will reaffirm their commitment to that today and outline a path to getting there. So I won't go through the agenda in detail because you know and I'm sure you've looked. It's going to be -- we've got a great day planned for you. There's a lot of time for Q&A. We'll have a 15-minute -- 10- to 15-minute Q&A after each one of the speakers -- after each one of the segment speakers. We'll have a coffee break for 30 minutes. We'll have a lunch for 90 minutes, where there's a lot of time to interact. And then we'll end the day with 30 minutes of Q&A. So for those of you who are students of the agenda, you know now that it is my time and my pleasure to welcome to the stage, our CEO and leader Mr. Bob van Dijk. Thank you very much. Enjoy the day.

Good morning, everybody, and welcome to our 2022 Capital Markets Day. I am actually really excited to welcome all of you here to my home, the Netherlands and to Amsterdam, which is the home of Prosus. We also welcome everybody who is joining us on the webcast today. So Eoin tells me there are 500 of you currently tuning in, and I really look forward to hearing from you when we go into our Q&A session later. So we're here today to share with you how we're positioned as a group. And actually, more importantly, we're going to talk today about how we're going to see continued outperformance for our shareholders from here. Now since our last Capital Markets Day in December 2019, the world has fundamentally changed. And while it's been a turbulent time, I'm actually really pleased with the progress that we have made over that time. We've scaled our businesses significantly and they're now pushing forward to profitability. And you'll hear a lot more about that specifically from Larry, from Laurent and from Romain later today. We've also really strengthened our financial position, which is, in my view, a foundational advantage if you are in a turbulent market. And particularly, Basil will take you through more of that in the afternoon. So structurally, we've actually doubled the size of Prosus on Euronext, and we're committed to finding further solutions to simplify the group structure. We've also allocated capital sensibly, and Ervin will walk you through what you should expect about our capital allocation going forward. And finally, I'm actually really pleased that we have a naturally sustainable, low-carbon and high social impact business. So that's great, right? That's a position we're in. But beyond that, I'm really pleased to see that in the last few years, we have really integrated sustainability deeply into our strategy and business practices, and Prajna, who runs our sustainability team, will actually tell you more about that later in the afternoon. I'm very excited about that. But before we get into any of that, let me spend some time on how we think about our position as a group and also how we plan to drive continued outperformance for you in the time to come. So let me begin, just reminding you for a second about what we are working on every single day. It's our purpose. And that is to improve the lives of people through technology. And we do that by operating in 100 countries across the world, and our products serve more than 2 billion customers at this point in time and really having that ability to improve the daily lives of so many customers is what inspires us, it makes me get up in the morning, and it makes us drive go the extra mile in everything we do. Now we achieved that purpose, and this is really specific about our group by partnering with local entrepreneurs. And I hope you walked through the hall of fame today where you see those local entrepreneurs, those are really the heart of the company. The heart of the company is not me, the heart of the company are those entrepreneurs that you've seen earlier. And we partner with these local entrepreneurs to build businesses with strong platform potential. And as you'll hear today, we are making great progress in building profitable businesses that also have sustainable growth opportunities. Again, we do that by identifying great products that are managed by great teams in markets that have high growth. And we also are always focusing on large societal needs that we can serve with an online platform. That's what we are about. And also this has driven tremendous value over time for the group. And actually, more importantly, than the value we've created, it really is the foundation for the progress that we will make over the next few years. Now if you look at the progress that we've made and our growth, it is helped a lot by the kind of markets that we operate in. So our segments operate in high-growth markets across the world, and most of our assets are actually not accessible to public investors. And that makes Prosus a unique access point to this growth with a blend of exposure to China, to India, to LatAm, to Eastern Europe and other high-growth markets as well as to the global tech sector, and that is really a unique combination of factors. And in these markets, growth is superior, and that's because greater than average GDP growth and also greater than average growth in Internet usage. And those are trends that are likely to persist over the long term. And typically also still work in an environment of recession, which we are likely to find ourselves in, in the next year or two. So our geographic profile is also one of the reasons why Prosus has and continues to deliver growth that is well ahead of our European peers and well ahead of our global peers. Now these growth trends have really helped us to get business to significant and real scale. Over the last 3 years, our portfolio has really grown at an exceptional pace. And you may ask, like, how have we done that? Well, it's really about our ability to leverage our online platforms to make off-line transactions more efficient. And that's played a central part here. In addition to that, building deeper ecosystems around our core products has driven substantial growth, and you'll see a lot more of that going forward. You'll hear more from the team today on specifically what we've done to achieve this. You will also hear a lot about our expectations for the core of each business, but also for the growth extensions. And actually, the combination of a strong core plus growth extensions that lays the foundation for continued growth and profitability for many years to come. This is a really important slide. And what it basically says is that we have picked some of the most attractive segments in consumer tech. So what it does basically, it looks at all kind of different sectors in consumer technology over the last 5 years and looks at the returns that have been achieved in those sectors. And then we overlay that with the focus segments that we have picked and becomes really clear that we've picked many of the top-performing subsegments in tech. Now it's important to acknowledge that the market has corrected this year and substantially so. But I'm convinced that these sectors will continue to lead in innovation and growth over the next at least 5-plus years. You'll hear a lot more from the team today on how we plan to drive that innovation and growth to get to that better outcome in the years to come. Now the combination of all of this has established Prosus as Europe's leading consumer tech company by some distance. And we, from here, have ample room for further value creation and further value unlock. Now we're committed to driving the continued outperformance of our portfolio, and we also see several catalysts that will deliver that. I'll touch more upon those in a moment. But I think it's all -- for all of us, I think I can say that we see the future with confidence, but it's clear that times have changed. Now history has shown time and time again that in change lies opportunity. And I think the current environment actually provides the opportunity for many new things and good things to come, and we're determined to capture those. Now there's many ways to illustrate change, but I think this is 1 way to do so. We believe actually private markets are approaching reckoning. Inflation is at 40-year highs. I don't have to tell you that public market valuations are depressed. And we think that private markets will see very similar trends, but probably with some delay. We're also seeing an increasing number of private companies run out of cash, and that's obviously a major factor in how we think about the world. Our portfolio companies are generally in better shape to weather the storm. And we sit today in a position of significant financial strength to fund those companies, and we can do that while others actually may fall by the wayside. Now that provides us with an opportunity to execute M&A if we see good returns. And just the -- as an example, acquiring the remainder of iFood, I think, is an example of doing exactly that. Now in uncertain times, it's actually tempting to look only at the short term, it's actually very normal for human beings when they're under a high amount of stress to only focus about the short term. But we're long-term thinkers, and it's important to zoom out. And when you do that, you can see really that tech has a 20-year track record of outperformance. Now I also don't have to tell investors that past performance is not a guarantee for the future. But it's certainly a good guide on what to expect. Technology advancements in the last 20 years have driven innovation and disruption of industries, and that really underlies what you see here. And I'm convinced that, that will continue to lead that disruption in the future. So we're believers, but we're also operators and investors in that disruption. Now our focus and our execution has led our group to outperform the market over the last 20 years and also tech as a whole by a good margin. And today, you'll hear more about how technology is disrupting the offline car sales model, how technology is making food and goods imminently more available to many, many people, but also around how tech is streamlining payments and making credit more accessible to billions of customers. And finally, you'll hear about how tech is bringing the classroom online and how it shapes education outside of the classroom and also into enterprises across the globe. I'm really confident that investing in this disruption will continue to drive out performance. Now I'm also not naive. This will not be easy. Strong execution will be required. But I would like to sort of give you some flavor of why we are uniquely positioned to navigate choppy waters. And it's mainly because we have, a, very strong balance sheet, and we're singularly focused on execution. Change is not new to our company, right? If you lead a company that has more of a 100-year history, change is actually integral to what we are. And as a company, we've evolved hugely. So just over the last 10 years, we very actively managed our portfolio. We made a number of very attractive acquisitions. While we walked away from many, many others that we actually, with the benefit of hindsight, typically feel very good about. We've also successfully disposed off assets, and we've listed a meaningful number of assets in the market. We've also evolved our organization a great deal. So 10 years ago, about a year before I became CEO 80% of our revenue came from traditional media. At this point in time, it's 0%. It's actually less than 0.5%, so I rounded down to 0%. So we focused our efforts into a number of core segments, and I mentioned that earlier, you see all of the leaders of those segments today. And we'll continue to explore the future, and we do that through our Ventures Group. And actually, Ventures has brought us really tangible results, right? So the segments of both food delivery and ad tech were actually born out of our Ventures division. And finally, we have evolved the group structure, and we'll continue to look for ways to improve it going forward. So if I summarize it, times are uncertain, but we are in an exceptionally strong position. So we have proven businesses that actually are growing profitability at the core, and I'll show you more about that later. We also have some very clear catalysts that will continue to drive value creation from here. And finally, we start from a rock-solid financial position. We have both strong liquidity and flexibility. So now let's dive into all of these, and this is an important slide for us here. Our core businesses are now generating increasing profits, and we are committed to further increase profitability of each of these business. And when you hear the team speak today, I think that will come very much to life. To be clear, we do expect continued growth, and we will continue to invest behind that growth, but we are moving now into a period where our scale really enables us to better balance profit and growth without having to sacrifice market share for that. And we have some really clear catalysts for value creation. So when Tencent regains ground, and we're absolutely confident that it will, we should benefit from 3 further catalysts. First, improving profitability in our e-commerce portfolio, while maintaining our scale and compelling position. The second is the compounding effect and the continuation of our share repurchase program. And third, we are working towards simplifying the group structure over time and crystallizing assets at the right time in a more systematic way. So let's talk a little bit about how we get e-commerce to profitability. So we plan to reach profitability on a consolidated basis in the first half of our financial year 2025. So that's just under 2 years from now. Today, the teams and Basil will give you more granularity on how we plan to achieve this. But in summary, sort of across the group, there are really 4 areas. So first, we're focusing on existing investments and winning in high potential markets where we see the most value potential to create value. Now that means that we probably won't branch out into 10 new things, but rather do the things we do now exceptionally well and with higher profitability going forward. The second is that core businesses that are already profitable, which you saw in the previous slide, will drive efficiencies and it will reduce cost to drive margin. And third, while we already run a lean corporate structure, we're also committed to reducing cost and our operating units are also committed to reducing cost. And fourth, like when businesses are not working out, we will exit them. So beyond growing our business profitably and as long as our discount remains elevated, we will enhance our NAV per share by continuing the repurchase program. So Ervin will talk a lot more about that later today, but the program is having a very positive impact, and you should expect it to continue for the foreseeable future. So not only do the benefits of the share repurchase program compound over time, they also compound and elevate the return on past actions as well as our IRRs. And finally, I want to underline our conviction in Tencent and our expectation for a very strong recovery of the business. So every day, we are increasing our per share exposure to Tencent, and I'm confident that this will result in significant NAV per share growth for the group. So many of you know, but Tencent is just a phenomenal business. It has a unique position in the China Internet landscape, and it's led by a world-class leadership team that has a track record to manage the business through all kinds of environments over time. I remain committed to being a very large shareholder for a long time, and we still see tremendous upside potential. We also expect Tencent will benefit from what we see are a few really important short-term catalyst, and I'll name a few specifically. So first, we expect that China will be dropping COVID zero. We cannot speculate on when it is, but we expect sooner rather than later, and that should provide a substantial economic boost. Also, Tencent has received a commercially important game approval and expect more to come in the near term. What you've also seen in Q3 results, if you looked closely, you've seen that actually advertising is turning a corner, and a rebound is expected when China reopens. And finally, we expect to see benefits from significant work on internal cost control because that's now largely completed. So to close, I am very confident about our future. And I realize we're going to have to manage through a great deal of change, but there's a lot of reasons to be positive. First, we provide a unique access point to profitable growth in assets that are not readily accessible to public market investors, and that access you actually get at a discount. Second, you will see that financially and operationally the business is in a very strong position to weather whatever uncertainty is ahead of us. Third, our businesses are on a path to profitability, and we are committed to hitting aggregate e-commerce profitability by the first half of 2025. Fourth, as I mentioned, we see multiple catalysts for value creation in the years to come. And finally, we are already a very sustainable business and are becoming even more so going forward. So that's where I wanted to leave you today. I'm actually super excited to see you here in person. I want to echo what Eoin said, I know it's a big investment. I'm really happy and proud to have you here. I hope you find the day useful. I look forward to taking your questions to having a chat in the breaks. And I'm sure you have a good time. Now actually, I'm going to stop. I'm going to hand over to Romain Voog, who is going to talk about our OLX business and our Classified segment. And I'll see you later. Thank you. [Presentation]

Good morning. I'm Romain Voog, I'm the CEO of OLX Group, the Classified segment of Prosus. And I'm very pleased to be here today to share an update on what we've achieved so far and the prospect for what we're very excited about for our future. I'll have 3 parts today. One is more about a presentation of the overall group and the trends we're seeing in our industry. The second one is a little bit of a deeper dive in what we call our core Classified segment, a high-growth, highly profitable part of our business. And the last part of our presentation will be about our new investment into autos transaction, our OLX Auto business. And you will see how all of those work together in a perfect ecosystem, as I'll call it. First, OLX is a group of trading platform that serves millions of people with a global footprint in more than 30 markets around the world. It's one of the leading group of platform. In the last 12 months, we've achieved $2.7 billion of revenue, and we have grown our business by 64% in the first part of this year. As an operating company, we have a full-fledged management team, a very experienced professional. If you take an example, our latest addition, Tim Davis, our Group CTO, is joining us from Booking.com with 30 years of experience, having working companies such as Microsoft or Amazon. And he's leading us in the vision of what needs to be the trans -- the IT transformation we need to drive within our entire group so that we can take the challenge of tomorrow. In OLX Group, we have 1,500 engineers and data scientists helping us to lead that transformation. When you look at Classified, it has evolved quite significantly across the last decade. From an online version of the offline Classified that we -- some of us have known in the youth. We are now moving into, what I'll call, Classify 3.0. And classifying 3.0 enables the category-specific user experience, is more transactional, offers an entire ecosystem of services and product in each of its category, is driven by AI and enabled by data and very importantly, is trust and safety enabled, which is very important for our users. I'm very pleased to say that OLX Group has jumped into Classify 3.0 and is well advanced into making it a reality. What's very interesting when you move into Classify 3.0, you need to invest on one end, but you increase the addressable market and the profit pool exponentially. If I'm taking general goods as an example, and here is an example of our European business. General goods, you used to be able to either pay a listing fee to put your product online or actually list for free. As we move into transaction, as we move into Classify 3.0, we charge transactional fee on every transaction. The millions of transaction that happens every month, we can charge a monetization on it. And as we do that, we get -- we move from a listing fee to a share of the transaction, which is a significantly larger profit pool. When we look at the number, I estimate is we multiply our market by a factor of 80. Looking at Europe alone, we talk about a market we're operating of USD 12 billion. So the runway for growth is significant in our business. One of the particularity of OLX Group is we build leading marketplace ecosystem. And that is an illustration of what it means. We have, let's say, 2 big different businesses. One is Core Classifieds. And Core Classifieds is a mix of what I call horizontal general platform, where you can find all type of categories from matters, to real estate, to goods, to job, to services. In goods, you have electronic, fashion, everything you want. And the mix of what I call vertical dedicated platform, real estate specialists, motor specialties, new car leasing specialists, new real estate property development specialists. What's very interesting is both fuel each other. The customer of one platform go and shop in the other one. In some countries, we have the entire ecosystem and 3, 4 type of platform in the same space, so that we can actually address the entire part of the market. When we launched autos transaction through an acquisition of FCG, we obviously saw the opportunity to leverage our Classified business into accelerating our autos transactional business to go quicker to scale and be more profitable quicker than anybody else could. When you look at our Classified and transaction, not only we share the same sellers, the same buyers, but we share an entire set of assets and capabilities: technology, data and ML model, I'll say a little bit more later on. CRM, marketing and obviously, every shared function and support and the local expertise we have by working in 30 different countries. That's what we call building an ecosystem. At the end of the day, it creates a unique advantage and a very strong tailwind for fast growth and operational leverage. The beauty of OLX Group in the industry we're operating into is that we are, at our core, a very strong actor and an enabler of sustainability. By enabling people to trade used goods or buy refurbished car or used car that is refurbished, we've been able in 2021 to sell 34 million tonnes of CO2 equivalent emission and almost 0.5 billion of gigajoule of energy, which right now is not a small thing. More importantly, our entire companies invested and engaged into making sure we become a more sustainable company and enable sustainability in a broader scale. Let me now move into classify, what I call Core Classified. Once again, core classify is a set of different business model under the same umbrella, horizontal platform, which mainly operate in all categories and mainly address private users like you and I. We operate those in 20 different countries directly or through investment we've made. We have a set of real estate vertical where you can buy and sell your houses, and we're familiar with both, mainly driven toward professional sellers, private buyers. We operate both in 9 different countries around the world, and motor vertical, which are specialized vertical categories, also more geared towards professional dealers, which we operate into 4 countries. In some countries, we operate all the ecosystem once again. When you look at numbers, today, in the last 12 months, Classified is $0.5 billion of revenue. Very importantly, it's a 20% growth rate in the last -- in the first part of the year, which is significantly above the peer industry benchmark, as we'll see later. 20% growth means in 4 years, we more than doubled the business we're operating. 90 -- 89 million active listing on our platform. And as I was saying, as we move into Classify 3.0, we multiply by 2 the size of our tech engineers in the last 2 years, which is a testament to our focus on building both platform enabled by technology. One of the very interesting thing about OLX is by scaling our platform and investing in our brand and our businesses, we have been able to establish position in most of our category in almost all our markets around the world. And this is very important because in Classified, when you have leading position you are uniquely placed to provide extremely more value to your customers, both buyers and sellers and hence, be able to monetize that value. As I was saying, if you take the example of Poland, where we are #1 in all categories, we not only operate the horizontal platform, but also a vertical platform in real estate, a vertical platform in cars, a vertical platform in new car purchase. So we really build it all together. Let me now focus on what is our main priorities in OLX Core Classified. And I'll segment it into 3 parts. One of them is accelerate profitability, no new news. The second one is about keep on fueling the foundation for growth and creating a bigger moat and a better customer experience. And the last one is about driving the technology platform that enables that at scale and cost efficiently. I'll dive into some of those in the following slides. Here, you can see what accelerating profitability means for us. On the X-axis you have the revenue growth of our different businesses, with a peer growth at 11%. On the Y-axis, you have our trading margin versus the peer industry, the peers are the one we all know in the trading industry -- in the Classified industry, sorry. What you can see is all our businesses show significantly higher growth than any peer company. In terms of profitability, one of our business is already up there into the higher end of the range of what Classified productivity can be. A large part of Europe, and we've excluded Ukraine here for obvious reason, the large part of our business in Europe is getting to peer margin profitability with very strong improvement if you remove Ukraine impact year-over-year. And we are very confident we'll be able to achieve upper industry margin in the short-to-medium term. I'm going to dive a little bit deeper into what makes us so confident about that. And I'm going to take the example of what we've done in South Africa. In South Africa, we managed 2 vertical businesses, as I've said, real estate ones and the motor ones. As we were, during the last 4 years, increasing our market leadership, and we measure market leadership by how much additional demand or searches we have on our website versus the next competitor, we moved from 3x larger in term of search to 5.1x larger. At the same time, we were able to improve margin from 39% to 59% in our property vertical and from 28% to 46% in our motor vertical. This year again, our trading profit are increasing in South Africa, while the growth rate of the business is around the 10% mark. So this is the recipe we use in all of our markets. It happens that South Africa is a bit more mature for us than some of the rest of the businesses, but you will see the same type of trends and improvement in profitability in the coming years. I've talked about monetization as a very important part of how we will improve our profitability. We have spent a lot of time, energy and effort and resources to build what's a leading position in each of the market, that gives us a unique opportunity to now monetize more the traffic we're providing to our marketplace users. You can see here, with the example of Poland, our largest market, that we've been able to increase the average revenue per user by 30% on average between our 2 big categories of motor and real estate in the last year. You can also see that when you compare our revenue per user versus peer benchmark around the world, but here, I think it's mainly Europe, to stay consistent. And we adjust for buying power, agent margin, dealer margins. So we adjust for any external economic factor. We still have an ability to increase by 100% our monetization to be at the same level as where most peers are today. And by then, the monetization we've had improved through better -- multiple ways of monetization for lead, selling data as a product and so on. So 30%-plus this year, a runway to double our monetization in the short term. Obviously, we'll do that cautiously because we want to make sure we provide the right level of services for our users as we increase the monetization. But it gives you a sense of the upside potential we have here. Moving into how we keep on investing in the foundation of Classified as a business and moving into a full-fledged Classified 3.0 business. And that is Pay & Ship. Pay & Ship is the ability of any one of us finding a product on our platform, buying directly this product on the platform, having this product ship to your place and having the guarantee that this product is genuine and is exactly what you need. And if you don't like it, you can return it. So an extraordinary service that within a 2-year timeframe, we've been able to build $12.5 million transaction in the first part of the year, 65% improvement versus last year. So a very strong add -- a very strong vetting by our customers. When you look at, what I call, adoption, 1 customer out of 2 is now using Pay & Ship on our platform. 65% of our sellers, 2 of 3 is using Pay & Ship as a product to increase their sales on our platform. What's very interesting too is the way Pay & Ship increased retention. The difference between non-Pay & Ship users and Pay & Ship users is a 23 percentage point improvement in retention. As we develop Pay & Ship, as we get more adoption, we get more users, we get more retention, but it's building the flying wheel of future successes. Very important part of Pay & Ship in the industry is the unit economics. We started Pay & Ship by providing the service at a very low fee. The idea was build it to scale, demonstrate the product to customer, get them excited and then monetize. Very common route to market when it comes to introducing a product. What's interesting to see is we've been able to triple the monetization of our product still increasing by 65% the number of people who use it. We have a very clear path of doubling this monetization in the mid-term and bringing Pay & Ship to breakeven. We are very confident we'll be able to execute on that strategy. And we believe that we can deliver 15% profit out of net revenue. So the 1.2% profit margin divided by the 7.8% take rate. And that is probably a conservative scenario. I'll finish here by sharing a little bit more about technology. As I've said, technology is an absolute enabler of success for us. We've invested in technology. We've invested in leadership to draft technology. And we've already made a lot of progress when it comes to building global platform that can serve all our markets and innovate faster and cheaper and more efficient cost. I'm going to go quickly through the fact that we're moving from more monolith type of historic system, but you can find a lot of industry players to a full microservice API-based platform, very standardized -- very standard type of IT transformation. But more importantly, we are building single global product across all our markets. The Pay & Ship I mentioned operate in 3 different countries today used to be operated on multiple different platform. By the end of the year, we'll have a single platform. That means when you innovate, you innovate for 3 market in 1 go. That means that you need 3 less people to do the same innovation, 2.5 to be specific. We do the same for real estate vertical. We operate in 4 different countries. We used to have different platform. We merged into 1 platform. You can see that it doesn't prevent us from growing, but it's a very strong enabler of profitability and innovation. And innovation will be key to be growing quickly, efficiently and stay in the game. I can go on and on, payment is 1 platform, advertising tech, marketing tech and all the component that you'll find in a technical system. One important thing I want to share is we have millions, I'd say hundreds of millions of customers around the world. Now all of those customers can be identified in a single ID across all our platforms. I know exactly who's coming to which site from which device and I can -- we can track all of our customers from device to device, it used not to be the case. So now we have a unique opportunity to leverage all this entire customer base and expose them to our entire set of services. That was a huge effort and a huge transformation, but is now fully complete. Another big aspect of what makes us successful is data and machine learning. And I'm very happy to say that I think we are very well positioned to take the full benefit of data and ML within OLX Classified. The first thing is we have now a single data team, a single data engineering, a single data platform -- multiple data platform, but the single data platform that has all -- that basically supply all of our businesses across all our countries. We have a single ML model platform. We are -- 130 teams are working on that platform. Any ML model that is developed in one part of the organization, can be implemented in the other one and retrained way quicker. ML is everywhere in what we do. It is doing our trust and safety. More than 90% of our ads are every day -- going every day through machine learning algorithm to help understand whether it's eligible for being on the platform. Every day, we have 8 million images being scanned through ML algorithm, ML-enabled algorithm to make sure they are relevant for our platform. We improved search, we improved ranking algorithm, we improved transaction, we improved monetization. Let's talk a little bit about numbers here. We've shared that during the H1 results of Prosus, I'll share again. We've been able to improve if you exclude Ukraine by 20% the revenue growth of our businesses if you remove FX impact, which has been quite significant, as we know, in our part of the world. More importantly, we've been able to improve trading profit from 19% to 27%, almost a 50% improvement year-over-year. And this is the first part of the year. I'm expecting the second part of the year to see a strong improvement to -- given the actions we've taken about our focus on profitability. I want to wrap up the Classified -- Core Classified part here by reiterating our focus on accelerating profitability through capturing more monetization upside and getting operational gearing from our existing cost base. The second part is really keep on fueling -- building the foundation and fueling the growth that will make us a strong leader and uniquely positioned to win in those categories by investing into category-specific product and services, and obviously investing in Pay & Ship. And finally, what we've just seen, which is the investment in technology as an enabler of success. If we look in the future, we believe that Europe will keep on growing at a 15% to 20% growth rate, which is very consistent from what we've told you a couple of years ago in our last Capital Market Day. But the trading profit we'll get in the upper level of the industry margin, 35% to 45%, roughly a little bit less than double what we have today. Brazil, our joint venture, Adevinta will have 15% to 25% growth rate depending on the market -- the macro situation, and we'll reach 30% to 35% profitability. We are very confident that this is absolutely within our reach. And I've showed you today a couple of the elements that will give you confidence that this will be done and executed. Let me now move to the second part of our business, our investment case with OLX Auto. We are all very, very excited about OLX Auto. And I'll share you -- I'll share a little bit more why now. The first thing I want to do is to make sure everybody is on the same page with what OLX Auto stands for and is? OLX Auto is a fully transactional business model. A car sellers want to sell a car, he get in touch with us through multiple apps or self-inspection tool, he can -- basically, we can provide him with an instant quotation of how much is your car worth, and we can basically buy the car on the spot, giving him the cash, taking the car. We'll then take that car, eventually do some minor repair, we don't do big repairs, minor repairs to bring it to the next level. Warehouse it, put in the warehouse and then sell it back to dealers or end consumers. So we own the car, and we resell it. OLX Auto today operate in 9 markets. We are #1 or #2 in each of those market. And cumulatively, across the last 12 months, we've delivered $2 billion of revenue in OLX Auto. That makes OLX Auto one of a large player in the world now. What get us so excited about OLX Auto? Three main things. The first one is it's an incredibly large business in terms of addressable market. Only in our 9 markets, this is $1 trillion of revenue, $1 trillion. The second thing, it's absolutely fragmented. Like it's multiple small dealers, most of them mom-and-pop stores who are doing that business. Online penetration is still very low, 1%, 2%, 3%, 4%, 5% in the most advanced market, so up for grab. And the last thing and the most important thing for me is the customer experience of the analog world is absolutely disastrous. Who bought a used car? I did a lot. You never know what you buy. You don't know whether you're gaining full or not. You don't know the right price for the vehicle. You have no warranties. It's very complicated. On the opposite, what we come is you want to sell your car, you can sell it in a minute. Go on OLX Auto, you'll get a quote, we buy the car. You want to buy a car, we'll sell you a car with a 200-point inspection report. We will deliver it to your house. You have 7 days to change your mind and getting back to us, and we'll give you a 12-month warranty. On top of that, there will be full transparency on the pricing. We believe this type of proposal can absolutely disrupt this industry and enable us to consolidate the used car market under our type of services. The six focus we have on OLX Auto are the following. The first bucket is really about scaling profitably. We all have seen what happened in the market in the last couple of months. Getting to profitable unit economics is absolutely critical. I'm very pleased to say that we've already achieved that in some of our market last year. So we know how to do it, in a sense. But scale profitability will be one of the main focus. The second one is about driving constant efficiency so that you can get to the right level of bottom line dollars at the end of the day. Scaling profitably is about first, focusing on the core markets. You will have read that we've closed some of our smaller markets because we want to focus on 9 markets, we're going to be #1, we want to be profitable in those markets. Those 9 markets are mainly there. You will see that in each of those markets, we've been able to consolidate our leadership position or get closer to the #1 by building scale at a fast pace. I mean we're talking about 100% growth -- plus growth in most of those markets. The second thing we're doing to scale profitably is we historically were selling our cost directly to dealers. When you do that, you get only a share of the profit pool. We are now shifting our business towards selling cars to the end consumer. When I'm saying shifting, right now, we have 50-50, half of our cars are sold to dealer, half our cars are sold to end consumer. A couple of years ago, 24 months, it was 0. So when you look at the last 12 months, we multiply by 2.6x the number of cars we've sold to, what I call, B2C, so end consumer, business-to-consumers. Why is it important? It is important because B2C yields 6 to 8 percentage point better margin than if you are selling to an end dealer. Why? First, you have extra margin. There is 1 less people in the middle, right? You become the end dealer. So you do roughly 4 percentage point better margin selling C2B -- sorry, B2C, business-to-consumer than C2B. And on top of that, as you sell to the end consumer, you're able to actually offer him the additional value services and financing. This is a huge part of profit improvement. In Chile, for instance, we have 4 percentage point better margin when we sell directly to the consumer and 3.3 better percentage points through selling financing and over value-added services. That's an overall 7.3 percentage points better, but is a huge part of our profit. To do so, you need to do a couple of things very well. One of them is you need to build a strong brand. Great news: OLX is already a very, very strong brand in the country we're operating to. So it's with no surprise, but you will see that OLX Auto brand awareness is already ranking around the highest in the country were operate into because we piggybacked on the already very strongly well-known OLX brand in those markets. The second thing is in the market we operate into the car is sometimes the largest investment somebody will do in the entire lifetime. They don't have a home, but the biggest second asset is the car. And so it's a lot of online experience, but you still need to provide some kind of offline trust and reassurance. For that, we've built inspection centers. We had 444 -- 442 of them in September last year. This year, we only added 10. So what you see here is, well, we multiply it by 2.6 the number of volume transacted, we only increased by a couple of percent the level of our off-line infrastructure enhancement. We're leveraging our current asset and get a gearing out of it. And that's part of the profitability improvement. More importantly, when we do that, we use technology and data to be more relevant. Right now, if you buy a car on OLX Auto, the pricing you'll get is actually AI-directed. There are a couple of people in the back checking things, but basically, we use our extraordinary access to data in all of the markets we operate to be able to provide a very accurate price of how much should I buy, how much should I sell? We have developed inspection tool, one of them will be demonstrated to you later on, but 'basically allow you at home to just scan your car, and they will tell you exactly what are the dents, what are the problems and give you a price instantly that you can accept or not. One of our goal is to move a lot of a transaction online. And I'm very pleased to say that we are progressing very well on that aspect. 75% of the car in Mexico are bought through self-inspection. We don't even touch the car. We self-inspect it and we buy it. If there is a problem or a dent, then we'll get it into a forklift -- a car lift, and we'll make sure that everything is fine. We have 90% of our purchase that I'm doing from your home in India. You call us, we come to your place, we inspect the car, we buy it on the spot. In Indonesia, 35% of our car is delivered directly to your home. That means that you start your journey online, you purchase with us, the car is delivered to your home. It's fully online 35% already there. B2C is a very strong investment for us, but that's why you will see that our profitability has decreased a little bit this year. It's a very strong investment, it's an investment for the future, it's an investment to build our path to profitability, and this is the explanation why. I'm going to go quickly here, but it's about integrated financing. So every time you buy a car on OLX in countries that's like Chile, Colombia, Mexico, Indonesia, automatically, we offer you if you're screened, obviously, and eligible for it, a financing capability. Financing is a 3% to 5% margin on top of a car. And the attachment rate of financing is 40% to 60%. So more than 1 people out of 2 will buy a car through financing loan. So it's both margin sweetener for us, it's also a great customer experience. We have built our own financing capability, also leveraging what we know in the process group. In some of our markets, our intent will be to build it in most, if not all of our market because it's an important element for the path of profitability. As we do that, we are very cautious on the way we're scaling it, especially in current market environment. And I'm very pleased to say that so far, we've been able to deliver a financing capability at scale in those market with low single-digit delinquency rate, which happened to be 100 bps lower than the market rate. So we're doing it. We're scaling it very cautiously, and we're able to see that we are doing -- we are picking the right type of risk profile. One other thing I want to stress is we are very well positioned on OLX to do that business. When you're doing loan car financing, the biggest problem is, as an insurer, you don't necessarily know what you insure. Here, we've inspected the car. We know exactly the value of the car. The second thing is if people don't pay, it's not a problem, come to us, give us back the car, we'll rebuy it from you, and we're done. We have the ability to buy back and sell back the car, but it's not something everybody can do. So I think we have a -- we're quite convinced we have a slight competitive advantage to be more successful in that field. OLX Auto is clearly benefiting from our ecosystem. When you look at OLX Auto versus OLX Classified today, 30% to 40% of the car we buy come from a seller on one of our OLX platform. We know exactly when they listed. We know how many times they've been waiting to sell their cars. We are very well positioned to come exactly when they need with the right offer and buy the car from them. Similarly, 30% to 60% of the car we sell are sold back through leads, leads that come from our OLX Classified platform. I'll say that finally, data is a key piece of success here. The hardest part of most of the players in the autos transaction part is getting access to the data. What do customers want to buy? What is the price of a car I should buy or sell? How do I contact sellers or buyers? All of those data we already have, millions of customers share those data with us every day on our Classified platform that puts us a unique advantage to win in that market more than any other person. A couple of numbers. If you exclude FX, we've grown our revenue in car transaction by 84% in the first part of the year, reaching $1 billion -- close to $1 billion. Our profit has slightly deteriorated as we keep on investing in building the foundation in technology and B2C. The very clear commitment we have, and it's not a surprise, is that we believe we will have this year, the bottom of the curve of investment and that we will see in the coming years, an improvement towards the path to profitability. If you look at longer-term margin and how this business will evolve, and I know there's been a lot of discussion in the industry about that. We believe the net revenue margin, the type of margin you get on selling your car could reach the 13-plus type of percent. Part of it is metal margin, we've discussed about it, part of it is value-added services from B2C. So the mix of B2C, the ability to buy and sell well will be critical in achieving that. Then as we improve our efficiency, our viable cost will go down. And as we scale our business, our fixed cost will be better leveraged. Overall, we think we can reach a 5% trading profit. And when you do trading profit divided by net revenue margin, that means a 30% to 35% profit out of net revenue, that is, we think, the stable state of where we'll get into OLX Auto. What makes us very confident here is that we've already seen that playing. In some of our markets, more last year, where the business was very well oriented, we saw this kind of margin in the most mature part of some of our markets. So this is not something that is unexpected to us, and it's not something that is not a new news for us. So OLX Auto accelerate path to profitability, and we want to see -- or we expect tangible results in the next 12 to 18 month, as we capitalize on gross margin upside, integrating financing and leverage our existing cost base. We're investing a lot in our cost base and building the infrastructure. We have a unique opportunity to get leverage out of it, and we're already doing it as we speak. The second thing is we keep on consolidating our position in core markets by deepening our B2C penetration and leveraging our existing capabilities. And finally, we have the chance -- or we have a competitive advantage of having a unique global tech platform across our 9 countries. It's a single platform, single team that give us a unique opportunity that every new engineers is contributing to the entire business. We will keep on investing in that platform as we need to build the technology that enable us to be more efficient and build at scale. Let me wrap up. OLX Group key takeaway will be, obviously, accelerating path to profitability. This is our first focus, and we believe we have a very clear achievable plan to succeed, and we are very confident in our ability to do so. The second thing is, obviously, getting leverage and gearing from our existing operational costs. Once again, we've already started this year -- the second part of the year, we'll already see the first result of this cost efficiency that we've been driving in the first part of the year. Finally, you will see us keep on investing in technology, both on the resource side and on the investment side to build this leading competitive advantage, both on tech and data. When you look at our path to profitability, we believe, as I've said, long-term ambition is 35% to 45% Core Classified margin, 30% to 35% of net revenue -- out of net revenue for OLX Auto, FY '25 to FY '26. When you talk about valuation, you have on the left-hand side here, the valuation we have. Right now, we're sitting at a $6 billion valuation based on public company and peer benchmark. So we think it's quite accurate. We believe that in the near future, we'll be able to improve by 2.5x the Core Classified valuation. And when you think about a business that doubled every 4 years, when you think of a business that will double its profitability in the next 3 years, you do the math, and it seems pretty realistic to me. Obviously, that will be done through margin expansion and cost efficiency, sustainable growth, 20% in Europe, and the acceleration and monetization of our transaction capabilities in Pay & Ship. In Auto, we see a higher potential here as we really scale and improve the profitability of our business with a full-time valuation ambition. With that, I want to pause, and welcome back on stage for a Q&A session. Thank you.

Thanks very much, Romain. All right. So we're going to go into the Q&A session. I'll give you a little bit of instruction here just in case you've never asked the question before. [Operator Instructions] First question, always really, Will Packer, and please limit it to 2, Will.

Well, my reputation precedes me. Thank you for allowing me to ask a couple of questions. The listed comps in the OLX Auto space are down 90%-plus in the last year or so. Could you just help us think through what gives you the confidence going forward? Is it the fact that you're emerging market focused? Is it the integration with the traditional online Classified business? Why are you more optimistic in the market? And then secondly, when we think about the long term of the OLX core business. To what extent is it future independent of the OLX Autos business? So for example, in Classified 3.0, you shy quite heavily the transactional business is a key driver of the future. Could you, in the event that OLX Autos is less successful, could you pivot towards a less capital-intensive model? Could you work with JV partners, for example? Or do you need OLX Autos for the Auto Classified business to succeed in the next phase of growth?

Thank you. So let me address the first question. So we obviously all have seen what has happened in the autos transaction industry and the type of valuation and sometimes scepticism that we've seen from investors. As I've said, we stay very excited about the opportunity we see in OLX Auto. First, because of the size of the market; secondly, because of the fact that this market is ripe for disruption; thirdly, because the customer expands that our type of offering can provide these absolutely superior to what is existing right now in the market. The second thing that is very -- make us very convinced is, once again, we've seen our businesses operating at the right type of property in some more mature markets, and we have refocused our business on those online markets. We have this unique platform that we can leverage. And we will demonstrate the progress we can do around profitability of our Auto business in the next future. So on our end, we stay very committed to it, and we stay very confident about it. I will finally say that we have also the opportunity of having Classified as a very strong tailwind to our success in the business we operate. So for us OLX Auto stays a very strong opportunity for growth and value creation. The second part of your question was about how the 2 are linked? I've illustrated during our presentation how the 2 were fueling each over. Now, a lot of people operating Classified segments separately from autos transaction businesses. And a lot of people are doing autos transaction with our Classified. So absolutely tomorrow, if we cannot successfully execute and we cannot successfully demonstrate the profitability path of autos transaction, we can absolutely separate those business.

We'll take one from the webcast. This one is -- hi, Romain, it's a good start. Do you mind sharing what the AOV and product mix shift is for the Pay & Ship since launch?

Sure. So the Pay & Ship is mainly offered in the what I call the goods category. And you would expect that given the logistic needs of Pay & Ship, it's rather a product that basically fit in a box, right? So no fridge and these kind of things. So the product mix shift is every -- as you would expect, a lot of electronics, a lot of fashion and that's common across any e-commerce platform. AOV wise, we've seen actually an increase in AOV as we start monetizing. And as once again, when Pay & Ship was free, there was no limit. When Pay & Ship becomes for-fee, then people start arbitraging a little bit more on how they use the services. What's more interesting, though, is with Pay & Ship, we've moved from a business which was mainly intercity to a business that is now -- sorry, intracity to a business that is now intercity. So what we're seeing is Pay & Ship adoption is really increasing when it's about shipping from one city to another. Once again, not very surprising, but a proof point. And we're very excited by that because certain tier opens a lot of opportunity. We used -- people who used to purchase on OLX, we're basically looking at the thing in their surroundings. Now you go on OLX and you can have any of the 90 million listings we have and basically get it from anywhere you want. So it's a great opportunity to increase the transformation level, increase the leads. I'll just say the final thing, which I think is very interesting about Pay & Ship is Pay & Ship is a mechanism for us to monetize the category and customers that previously didn't pay any fee on our platform. So it's not cannibalizing anything, it's actually incremental to what we used to have, which is a great upside for our future growth and future profit pool.

Okay. Cesar, did you have one? Want to speak into that?

It's Cesar from Bank of America. I have 3 questions, if that's okay. The first one would be to explain the -- when you buy cars, you said that 40% of them are sourced from the Classified business. So where is the other 60% sourced from and sourcing 100% from the car Classified vertical, does it basically has an impact on profitability? The second question would be on understanding better how do you mitigate the credit risk? And the third one to understand if the number of inspection centers has reached the scale that you wanted to have?

So on the first one, indeed, 40% of our supply is coming from OLX Auto, the rest is coming from customer working in our inspection center and selling their cars. It's coming from people directly logging on to OLX Auto. As you've seen the brand awareness of OLX Auto is quite high, if you go in Indonesia, where we are #1, people now know that we're there and when they sell the car, they want to come to us and get a quote from us. So a lot of our traffic is just direct SCO or marketing -- performance marketing driven or brand driven. The 40% is indeed Classified. So that's first element. The second element was around, if I recall, well, around the credit risk. So here, I mean providing credit is not new to process, and we are very lucky to be part of a group that already have a lot of expertise. We're starting to add expertise to really go down the learning curve very quickly, and we've obviously hired people that help us build our credit risk policy and our credit risk tool. So right now, what we have is we have an entire tech stack but basically deal and analyze credit risk. Once again, we have a lot of data. We complement those data, we have external sources of information that help us have a better prediction. We also -- and so we have a tech stack, we have an entire set of teams that are used and come from an industry. And finally, we've provided a very strong governance framework in line with process governance around having a credit risk policy with professionals -- independent professionals that help us better manage that risk policy. That's on the risk side when you provide the credit, as I was sharing there is another effect where we are probably uniquely positioned to succeed is that when we see defect or delinquency, we're able to actually very quickly do trade-ins with the customers, retake the car and giving you a cheaper car or something like that or just retake the car and resell the car ourselves. So our ability to recover when there is delinquency is actually higher than any competitors, which is a great thing in both times. The third question was, can't remember.

On the inspection centers, if you think it already reached the scale that you wanted to have or do you need to open more?

We'll probably open somewhere as we scale because at a point in time, there is this stat where you need somebody to be not too far away from your inspection center. Now let me share with you one of the way we want to do that, right? Because this is off-line infrastructure and cost, and we want to try to be as viable as possible as we want to reach profitability. I'm going to take the example of Turkey. In Turkey, we've done a small equity -- we've taken a small equity stake into the largest operator of inspection center in Turkey. And with a minimum investment, we've been able to reach 300 inspection points that are manned by an external person, when you go there, you see an OLX-branded place, and they basically inspect on our behalf the car and we take the car from them. By the way, the great thing is if it's badly -- if it's not properly inspected, they bear the risk and they bear the cost. So we're developing a model where it's way more flexible and viable to be able to inspect cars. So yes, it will probably grow, but we will gear ourselves towards more flexible models first answer. Second answer is we will see more and more technology being used, self-inspection, home inspection to try to not rely on off-line infrastructure, but more technology or very variable cost type of infrastructure.

Okay. Running up on time. But Lisa, let's maybe just list to one, and then we'll have Romain back later on the day.

I have actually 2 questions. I think you have...

So much for my instruction.

I think you have a number of associates and JV, obviously, OLX Brazil, Carousell, EMPG, et cetera, and letgo. So what are your intentions over time with the ownership -- in terms of ownership of these assets and how integrated they are with all the initiatives in terms of shifting to this global tech platform. Can you achieve similar synergies with those associates and JV? That's the first question. And secondly, a question on your margin targets of I think you said 35%, 45% for Europe and I think 30% to 35% for Brazil. So firstly, why is the margin in Brazil structurally lower than Europe because I think you're already #1 in real estate and auto. So anything we should -- you can flag here? And secondly, what's your assumption in terms of the share of transactions because I guess this is much lower margin than the core business. So how big do you think the transaction within C2C is going to be within that margin target?

So the first question was about...

Associates.

Associates, sorry. So associates, so we have a history at OLX and Prosus to invest early in some businesses and then grow into their shareholdings and sometimes fully acquiring, right? We've done that with a couple of our businesses, including in OLX Classified. So you will probably see this type of behavior when it makes sense. When we see a business that we have strong conviction about, when we see a business that has strong synergies with our core businesses, and when we see a business that can accelerate our profitability. In other businesses, sometimes we've just decided to divest those businesses, and we've also done that at OLX Classified. So I would say there is not a single answer here. We will make sure that the business, we increased our share in have the potential to bring the extra value and disproportionate value to OLX. You then asked a question about...

Margins structurally in Brazil versus...

So margin in Brazil is due to the fact that you are probably a market which is a little bit less mature. And Brazil margin is very impacted by the real estate market that has been seeing a couple of headwinds lately, especially with interest rate increase and the like. So there is the still path of margin issue in Brazil. And the next one -- sorry, short-term reason. The longer-term reason about the margin in Brazil is just the maturity of the business. Brazil is a huge market. We are really at the early stage of our market growth. And so you'll just see the delay in the maturity. And your last question was around Pay & Ship and the size of Pay & Ship in the future. So Pay & Ship, we do $12.5 million transaction, but we are really at the beginning of it. And that's the beauty of it. And right now, most of those transactions are used, but as we build Pay & Ship what is really exciting is that we build the capability to not only offer you to transact used goods, but to enable any merchant who want to use our platform to sell new product to consumers to actually get on our platform and operate with us and that has been seen in other businesses. So right now, we're at the beginning, it's a single-digit size of our transaction and we expect it to, obviously, grow. The type of growth rate right now is you've seen 65% year-over-year. If you multiply that by an AOV that has grown, you're probably around the -- you're closing on under 100% growth marks. Yes, how far it will go? Very hard to say, but we know it will be a significant part of our goods business in the future.

Brilliant. I think the symmetry there is perfect between Lisa to Romain, so let's keep the French connection going and bring over Laurent from PayU. So thank you very much. [Presentation]

Hello. Good morning. So for the past 6 years, I've been with PayU, we've been investing to build and to grow a global payments business, purely by focusing on fast-growing developing markets. And the reason we exist is very simple, it's actually just to connecting our consumers and merchants on our platform. So on one end, we integrate all the payment methods that we have in our markets so that consumers can pay with what they know and what they prefer. On the other end, we enable merchants to collect payments from all of these markets in all the currencies, and they can do that with just one single API. So today, we are in 4 continents and 17 markets doing just that. But in all of these markets, there is really one that stand out and that's India. And that's really the topic that I want to discuss with all of you today. What are we doing? What are we working on in India that makes us really so excited about the opportunity? But to understand India, you need to understand UPI before. So some of you might be familiar with UPI. Otherwise, I'll give you a 1-minute crash course on this. So UPI stands for unified payment interface. And what it is, is it's a payment platform, actually built and developed by the government in India to boost digital payments. It's actually very easy to use if you are a consumer, you can link it directly to your bank account. And for merchants, it's a real-time payment, and it's free. So it's been a huge success actually in the market. Let me show you. You can see here on this graph, this incredible green line going up, that's the number of transactions going through the UPI platform in India in just a few years. This is truly unique in the world. This is truly unique in the payments industry. There's a couple of points, though, to know about UPI. The first one is that it's really, really good for small transactions -- low-value, small transactions that you do on your phone on a daily basis, really good for that, right? Not so much for the rest. For the rest, high-value transaction, more complex transactions, cards are still dominant, right? The second thing is for all the success of UPI, still today, 50% of all the transactions are still made with cash. So you can see the runway that we have in the market ahead of us. So now that you are a bit more familiar with UPI, let's see what is the opportunity for us in India. What is our plan actually, and why we are so excited about this? Well, the first reason, as you know, is that India is the fastest-growing economy in the world right now. But it's not just today, India is on its path to become the third largest economy by the end of this decade. It's quite unique. Look at the trajectory of the whole country. It's incredible. And for us, if you look at financial services, the opportunity is in the trillions. A big part of that is, of course, the growth in digital payments, right? This will triple in the next 5 years. The time horizon is actually very short. But I think more importantly, what we see in India is the rise of a young, affluent middle class, purely digital, who want to have access to a new type of services, financial services, like lending, for instance, that are not given to them by the banks or new services to manage their money. So that's the opportunity that we are going after, this young, affluent middle class with our products and services. So it takes us well beyond payments. And to do that, we are building an ecosystem. And we focused on 3 different and very distinct set of customers. The first one are, of course, the merchants, right, that's where we've started from. In India, we focus only on e-commerce, online e-commerce. And we've been quite successful at this. If you take the top 100 e-commerce merchants in India, 96 actually use our platforms for our payments. But with merchants, we give them not just the checkout solutions, we give them also a way to increase their sale. And that's the buy-now-pay-later product that we have developed. And to do that, we move to the consumer side of the equation. In India, there's about 300 million active consumers really shopping online on a monthly basis, 300 million. And at one point in their life, they will come through our platform. And they will share with us their data, their payments credentials, their phone number. And it's truly by using this data that they are sharing with us that we can build new products like buy-now-pay-later, which help the merchant increase the sale, and it's actually the merchants offering that to the consumer. So you can see how the 2 work together. The third set of customers we are serving are the banks. The banks are, of course, critical in any financial services industry. And they come to us actually to use our payment platform. We have a white label payment platform that banks can use for their mobile payments, for instance. They come to us also to use our technology for more advanced services like fraud management, and they contribute also to the data on our platform. So in India, really, we are building these ecosystems around merchants, consumers and banks to lead with our product, to lead with our technology and to lead with our data. We're also leading in the market with our scale. This has been really a rapid growth business for us, and we've reached scale in payments. We processed, last year, more than $40 billion of volumes, 7x, right, in just a few years. We are leading also in terms of revenues in the payments industry in India. And I should say we are also one of the very few profitable companies in the payments industry there. And this leads me to the key question, a question that we get most of the time. So I don't want to preempt your questions, but I'll do that one for you. How do you make money in India? How can you be profitable in India, especially when UPI is free for the merchant? So there's a couple of things there. The first one is, as I say, UPI is very good for low-value transaction, but for the rest of e-commerce, cards still dominate. In our payments mix, all the transactions that go through our platform, UPI is only 18%, 1-8, 18% of our mix. So all the rest are cards. So we make money from that. The second thing is, by the way, we are still able to charge a small service fee for UPI transaction. It's a very small take rate, but it's a very high profit margin, 85% pure profit margin. But I think more importantly and more strategically for us, we've been investing over the past 3 years to build new products, products that are not linked to our ability to charge a merchant discount rate. Products that are not linked to us charging a processing fee. Products that are actually more like a SaaS type of business, subscription services. And today, what you can see these products that were really nonexistent 5 years ago, they now account for 1/3 of all of our revenues in payments. So this diversification of revenues, it's really at the core of our strategy. These are products like affordability platform that we sell to merchants. These are products like authentication, fraud management that we sell to merchant on a subscription basis. This is also omnichannel. Today, it's 1/3 of our revenues already. What we can really see going forward in the next few years is that this will account for half of all our revenue. And therefore, that gives us the confidence in terms of the ability for us to protect, but also expand our profit margin. But beyond the diversification of revenues, what is important for us are the 2 next ways of growth. The first 1 that we see is around omnichannel. Omnichannel is to put it simply, the solution for consumer to use our phone and pay in-store, right, to make a transaction in store. For us, at the end of the day, it's the same transaction. It starts with your phone, it goes to the cloud. That's where we process it. This is it. The big difference here is that we are embedding our payment solution directly in the app of the merchant or in consumer interface like WhatsApp. WhatsApp is the factor of the consumer interface in India, and that's a key partner of us. But the point here is also that we are completely leapfrogging the legacy systems of the point-of-sale terminals. This is not a hardware market. This is not a hardware solution at all. We go directly through our software in the mobile of the consumers. And we start now seeing the growth coming from new channel. And this will be a big driver for us in the coming years. The second wave of growth will be credit, will be our ability to deliver digital lending solutions to the consumers. That's a very big part of our strategy. This has been a big part of our investments. To go deeper on that opportunity, really explain you how it works and the details, I want to invite to join me Prashanth. And Prashanth is the founder of PaySense. He's the CEO of our credit business, and he will spend some time with you going through this opportunity. So Prashanth?

Thank you, Laurent.

There you go. The clicker is yours.

Thanks. Folks, I'm Prashanth Ranganathan. I'm the CEO of PayU Credit in India, and it's my pleasure to be here today. I've been at the helm of PayU Credit for just over 3.5 years now. And prior to that, I was the Founder and CEO of PaySense, a company that PayU invested very early on and then subsequently bought in January of 2020. So why am I still here? The credit opportunity in India is the next big S-curve that builds on top of an already thriving, already at scale payments business. A great credit business is built in harmony across 3 key dimensions: growth, resilience and profitability. It's these 3 that I will unpack over the next few minutes for you. Let's talk growth. There's no growth without a large target market, and we have one. We all know that once you go digital, you don't go back, whether it's the way you order your food; it's the way you educate your children; it's the way you hail a cab; it's the way you perhaps process your payments or the way you avail credit. India is going through an unprecedented rate of digitization across all sectors. Credit is no exception. We as PayU, as PayU Credit in fact, with the scale, the license and the capital we enjoy, sit in a very privileged position to capture a lot of this white space that's becoming available. We built a credit business through our key strength. We leverage our large merchant network to promote and distribute our buy now pay later product, which is called LazyPay. LazyPay actually drives convenience at checkout by allowing a customer to conduct any number of transactions at a merchant on a monthly basis and pay for it at the end of the month in one shot. This is a huge convenience factor for consumers and consumers love it. In fact, so much so it's actually the merchants that love it just as much because it actually improves not just their basket size, not just their checkout experience, but also delivers a fundamentally much better success rate at checkout. So merchants promote it, customers love it. So let's talk some numbers. We have 58,000 merchants in India who use LazyPay, who offer and promote LazyPay every day. Laurent talked about 300 million consumers who are digital and online. Out of those, we have preapproved 66 million consumers today using our data science. And out of those 66 million, 4 million of them have already on-boarded on our platform. And each month through our large merchant network, we onboard 200,000 net new consumers who come and onboard themselves onto our platform. These are net new customers, free of cost delivered to us through our merchant network. This is phenomenal. There's a great flywheel that's working for us. And these consumers when they activate do 3 to 5 transactions every week. And why is that important? An engaged customer continuously participates in an exchange of data and trust on the platform. They give us data, we deliver more trust and they give us more data and we systematically grow them into longer form, much bigger, much more needed credit formats. And those credit formats are far more profitable. And you may know those credit formats as personal loans, revolving lines of credit or what have you. And that's the journey we've built. That's the flywheel that's really, really, really working for us. And that's what we're building on for the next future. Today, we use the flywheel to deliver credits to the consumers, but we're not limited to credit. We can deliver other financial services right on the back of this very same flywheel. And that's what we're most excited about. Let's switch gears. Let's talk about resilience. The best way to talk about resilience is talk about what happened over the last 2.5 years. The last 2.5 years, boom, our customer growth went from 1.3 million to 3.9 million. That's quite impressive. But the chart on the right tells a very different story. It tells the story of resilience through the lens of monthly issuance. If you noticed, back in Feb 2020, even before the pandemic actually hit, we actually anticipated a large macro shock, and we retreated to higher ground. We pulled back our issuances, and we deployed all our energy in supporting our customers remotely and also setting up teams to help collect on those customers while we were remotely working. Very quickly, as the lockdown starts to roll out, we noticed that most offline businesses suddenly went online, and customers were demanding this BNPL product that we were offering. So we systematically started to see that we were more resilient in our BNPL short-form credit, and we started to grow our issuances in BNPL. We were conservative in how we approach the long-form personal loans, but we did double down on customers that were resilient that we're making on-time payments, and we were able to build out a fundamentally different business by the time COVID Wave 2 hit. COVID Wave 2 was far more devastating in India, bringing the country on her knees. But for us, it was nothing much more than a tiny little blip. We had, by this time, used the year that had just passed to fundamentally transform the business, build a far more credit -- far more robust credit profile, and we were able to continue our issuances, and we haven't stopped since. I'm proud to announce that the book we have written through COVID and since, it's far superior to any book that was ever written in the history of the company prior. This exemplifies 2 things. It exemplifies agility and resilience. Two key traits, as you know, that are super important for any business to survive and scale in emerging markets, especially in a country like India. And while that was going on, our revenues went boom, boom, boom, pow, 4x. And our losses went half, 6 to 3. That, in combination with the fact that we diversified our pools of capital, we got our NBFC rated, we expanded our co-lending, we pulled off an industry first securitization of our unsecured loans and kept our operating costs relatively flat, results in a culmination with me standing here in front of you today proud to announce that we are now breakeven. And this point forward, we are forever #profitable. Talking about profitability. It is really, really, really important to know the difference between a manufacturer of credit and a distributor of credit. Many of our partners, many of our competitors, many of them you know, are actually distributors. We, as manufacturers of credit, fundamentally enjoy much better economics in our business than any distributor does. So let's unpack this by looking at a horizontal view, an annualized view of a loan at steady state. In our business, we enjoy a net revenue margin of 23%. We are 22% today. We can get to 23% because we know how to underwrite high-yield segments better than anyone else can without taking on additional risk. Our cost of capital, and I just mentioned that we got our NBFC rated, we have diversified our pools of capital. We have a large co-lending mix to our base. Our cost of capital is coming down. We are 10 today, we're turning to 9. Our loss rates already talked about. We went from 6 to 3. In fact, we're trending lower than 3 today. And lastly, we've brought down our marketing and CAC significantly. This is -- there are 2 things working for us. One, we've gotten laser-focused on how we market to our customers, who we market to, when we market to. We know what their customer lifetime value is, and we know how to build a cap to CLTV ratio even before we on-board the customer. The second thing is we have a large BNPL base now. We know how to get in front of them, they're highly engaged and they do love our product. So that's working for us. And what does that mean in financial terms? That means we can generate a trading profit margin of 6%. Today, we're north of 1%, but we can generate a 6% trading profit margin, which effectively means a 20-plus percent ROE delivered at steady state. To bring this to a close, we have a phenomenal flywheel that's working for us, delivering very low CAC customers every month to our doorstep. We know how to engage them. We know how to create this trust data exchange with them through our app. We know how to underwrite them very deeply and meaningfully better than any other manufacturer in the industry can. We can also use our capital to our advantage by significantly lowering that cost over time by diversifying that pool of capital. And finally, that results in a very beautiful profitable business, if I say so myself. So thank you for your time. And more importantly, thank you for helping me build this amazing business over the last few years. Back to you, Laurent.

Great. Thank you. So let's look at #profitability. Thank you, Prashanth, on this one. So you heard Prashanth, right, with his passion, but supported by real data. Let's see now how the numbers back up actually for our business. So the first one that you need to remember is the growth in our business, right? Actually, what we've seen is an acceleration of the growth across all of PayU over the past 2 financial cycles, right? Growth in volumes. So we've reached the scale that we need there; and growth in revenues. This growth is coming not just from India, of course. We have a very successful franchise outside of India, especially in our cross-border business, which is growing actually north of 50% year-on-year. So that growth that we've seen is translating also in revenues and profits, right? If you look at more of the details here, a couple of points I want to make. The first 1 is on the payment volume, yes, you can see the importance of India. You see also the importance of the rest of our franchise. And we have leadership position in really, really key markets like Poland, for instance, or Colombia or Turkey. So we are quite confident that we can sustain this level of growth for the next financial cycle. The second element is if you look at the mix of revenues, what you start seeing here is our credit is becoming a really important part of our revenue mix. Today, credit is already 15% of all the revenues that we are adding in India. By the end, really, the next financial cycle, it will be 1/3. So 1/3 or 1/4 of our revenue is coming from credit, okay? That's quite significant. And we are quite confident on this because we know how to scale the user base. We know how to scale the loan book and get really the risk under control. And the third element, which is really important is that we are coming at the end of our investment cycle. We've invested really, especially over the past 3 years, to build our credit platform, right, to build our loan book. So to build these new products and services that are really critical to diversify our revenue base. But now we are coming to the end of this credit cycle. And with the scale and the momentum that we have, we can really see the path to profitability. And how we get there is actually for us quite straightforward. The first one is, of course, the scale, as I mentioned, it's going to be half of the impact. The second thing is the constant optimization of our platform. What I mean by optimization is we are constantly reducing the cost of payments, constantly reducing the cost of operations through automation. And the third one is also the rationalization of our cost base across all of the countries and more synergies there across our platforms. So with these steps, with the momentum that we have in the business, the scale, the growth in revenues, and the unit economics that we have in our credit business, we are quite confident we can reach profitability. And here, you have a level of ambition for us in the next financial cycle really to get to 10%, 12% profit margin in our core payments business and the double in credit. A couple of points here. For those of you who follow the payments industry, when we report our profit margin, it's based on our gross revenues. If we were to look at our net revenues, this profit margin would actually be more between 30% to 35%. And that's actually more in line with other global payments company. The second thing is you see here how credit is much more profitable than payments. We can see credit becoming 1/3 of our revenues. So by the end of the next financial cycle, what you can expect is 1/3 revenues credit, 2/3 payments. But for profit, it will be 50-50. That's the kind of ratio to have in mind. So if we do all of this, like we've done in the past, we are quite confident you know that we can increase the value of the PayU franchise for the benefit of process, for the benefit of all our shareholders. Our value has gone up. Last time I presented to you, it was 2.6 billion. It went up to 6 billion at the end of last year when actually we [indiscernible]. Now it's down to 4. But with the plan that we have, with the momentum that we have, with the markets that we have, we are quite confident we can double or triple that in the next few years. So before we take your questions, just a few takeaways, right? What I hope you can remember from this presentation, PayU is in all the right markets, high-growth markets, sometimes complicated markets, but this is where the growth is for the next 10 years. We have a leadership position in India. Not just in payments, but across all financial services. We have the right to play and to win in India. We are rapidly scaling our credit business. That's a business that is breakeven at the end of this year, and that will be profitable for the next financial cycle. And with the momentum, the scale, the growth, we are focused on the profitability to increase the value. It's as simple as that really. So thank you for your attention. And now we're going to take some of your questions. Eoin is going to come back to be the master of ceremony. And Prashanth, yes, so we can take the questions together. Thank you.

Right, same as before. That's right. I think boom, boom, pow will stick with me for the rest of my life.

#profitability.

#profitability, #questions. All right. Will?

It's Will Packer from BNP Paribas. Just 2 questions, please. Firstly, you in recent history announced the acquisition and then termination of BillDesk. At the time of the deal, I remember you citing that BillDesk did 4 times as many transactions as PayU. Could you just -- and I think on reflection, obviously, with the changes in market backdrop that this determination was well supported by the market. Could you just help us think about the growth opportunities associated with that deal and whether you need to pursue M&A or can organically drive those areas of growth? What are you missing from BillDesk and what can you create separately? And then secondly, from a global standpoint, credit is quite politically sensitive. We've seen that and financial in Tencent fintech credit as a growth driver of [ APRA ]. We've seen in the West credit be quite sensitive as well with enhanced regulation. Could you just talk us through the maturity of the regulatory environment in India and whether we should view that as a risk?

I'll take the first one, Prashanth, if you want to take the second one, I'll add a few comments on this one. Look, BillDesk, very simple. Good topic for lunch, by the way. You do a deal in September '21; one year after, the market has changed completely, right? That's one. So for sure, I think there was a sigh of relief from a lot of shareholders when actually, the deal didn't go through 1 year after. The reality is also that India is a market that is growing extremely fast. And for us, we couldn't wait any time further because we need to innovate. We need to release new products, and it was already 1 year for that deal, right? And that was starting to hamper actually our innovation capacity in the market. And the third one is yes, indeed, one of the areas of synergies was around data, right? And the reason for that is they have a big payments platform for bill payments, which is a lot of transactions, very low value. The reality here is we can get access to this data through other commercial partnerships with other platforms. And that's what we've been doing. I mentioned omnichannel, for instance. For us, the importance is to embed our payments platform into different consumer apps. WhatsApp is one of them, for instance. WhatsApp is 250 million daily active users, I think, even more. That's where we get this type of data as well, right? So at the end of the day, the deal didn't happen. Actually, our franchise in India is stronger than ever, and we continue actually on our credit strategy without this source of data, but we have others as simple as that. You want to take the second one on the global one?

Yes. So I'll answer it in a few different ways. But first is, I think it's important to note that we do carry the right licenses in the market to operate and offer credit to both consumers as well as merchants. And that's important because in an emerging market, often you find players on the fringe -- and so we are fair and square in the middle in front of the regulator. We're actually helping shape some of the regulation. And the regulator in India has actually been very active. If you've looked at what's happened over the last year, the regulator has been fairly active. And we welcome this because I think once the regulation is set and is clear, it actually creates a pathway to operate. So that's the second part. India still has a very low level of credit penetration as compared to China or the U.S. or other markets. So the regulator and the government both recognize that for the trillions of dollars of growth in GDP that they want to see, credit has to play a fundamental and crucial role. So credit is actually embraced. And for players that are at scale like PayU, I think it's less of a risk that we would find ourselves on the wrong end of regulation. So we are actually actively helping shape that regulation with the regulator. We're actually holding the right licenses to offer the product. And given the fact that the credit penetration in the country remains low, I don't see a significant kind of spillover risk similar to the U.S. or China or India.

Do you have anything over here? We do have 1 from the webcast, and it reads Laurent, that would be you. Do you expect UPI will become more used for larger payment amounts? And if so, would that be a threat or a benefit to PayU?

The answer is yes, of course. Look, the reason for that is it's not because consumers don't want that, right? It's more because the capabilities really of the platform were not quite up to the game. Without becoming too technical, what is fundamental for merchant is the conversion rate. It's like, look, I've got 100 transactions coming my way. How many of them will actually close, will actually convert into a real payment that will settle. That conversion rate is the 1 metric that everybody is looking at. It was actually quite low for UPI on high volume and high value sort of transactions. That's actually what we can build ourselves because we integrate UPI in our platform. And actually, what we are delivering to merchant is the higher conversion rate. So we will be an enabler of that. Is that a threat for us if people go from a creditor to UPI. The simple answer is no. UPI is incremental growth of transactions that we didn't see in the market. It didn't cannibalize the credit card. It was on top of the credit cards. If you have a high purchasing power in India with a credit card in your wallet, you will still use it for your points for your credit and so on. So what we are doing here with UPI is actually enabling it because we want that incremental growth. And the last thing you need to remember again is lower take rate but much higher margin for us, okay? So that's why, actually, we are quite bullish in facilitating UPI payments.

Okay. I think we have time for 1 more. Silvia?

It's Silvia Cuneo from Deutsche Bank. First question, you talked about how you're close to the end of the investment cycle in India. Can you maybe share some thoughts about the other countries, to what extent you are investing there or you can elaborate what you've done in India? And then second question about the loss rate. You talked about the opportunity to reduce it further from 3%. Just wondering if there is any impact of the cycle potentially that we should be aware of?

I'll take the first one, you take the second right? So the first one, when I mentioned investment cycle, that's across all countries, across all business, okay? So it's not just India. It's investment cycle across all of our business of PayU. We've built new services, as I said, for India, but also for cross-border specifically or for some very important markets, for instance, like Colombia, right? We did an acquisition recently just to beef up basically our acquiring capabilities in that market, which is really critical to us. But as I said, in our financial plans now, this investment cycle is basically finished. We will always stay very opportunistic, of course, right? If there are some very good acquisitions to be done accretive to the overall business. But overall, for us, this is pretty much it.

Yes. And I think with regards to the loss rates, I think you have to look at the 3% in contrast with the 23% headline rate, right? So as a function of like what we are -- what the loans are going out at, 3% is still an acceptable number. In fact, public traded companies in similar landscape will often be at 5.5%, 6%, if you look at their reports. So we're at 3%. We can -- we're trending to 2.5% as we speak, and we'll perhaps settle just around there or just a little bit lower than that. And the reason I say we will not go down to where the banks are at 1% is because I think as we expand the market, as we look to kind of bring on net new consumers that we can serve, we would also like to learn. And so this is learning capital. It's not lost, but learning as I see it. So -- but that said, if we need to fundamentally alter the economics of the business, we can always juice it down, go back, retreat to higher ground again. But this is a good time to scale credit coming on the back of a large, long pandemic. So we're looking at 3% as a good number to hold at this point.

Very good. Thank you very much, gentlemen.

Thank you.

That was PayU.

Thanks.

All right. Now time to stretch the legs a little bit. We're running a tad late. So we're going to go to the coffee session now. There's going to be some snacks down here. But if you want to something hot, you want to go back out to where we were in the morning. Also, the bathrooms are there. For those listening on the webcast, we're going to be coming back in 30 minutes. So that's 11:33 CET. So thank you. We'll see you in 30 minutes. [Break]

Hello again. Sorry about the delay. Right now, hopefully, you had some nice coffee. You're all jacked up. And speaking of jacked up, I'm going to bring Larry to the stage and EdTech.

Sorry about the late start. We're in hair and makeup, and I like an aggressive part down the middle. It goes kind of back here, took a little more time than we expected. You will get [ bang, boom, pow ] from me, strictly jokes. Now on to EdTech, and Bob touched on it earlier today, when we talked about 1 of the visions for our group from an investment perspective is to invest in large areas of consumer needs that have yet to be addressed by technology. And in general, we don't like to hang our hat on TAMs as a pipe dream, but it's hard to look past the numbers for EdTech, right? You're talking about a global sector that's measured in the trillions, huge chunk of global GDP. And the number on the bottom right of this slide is the 1 that drew us first to the sector when we started looking back in 2014, still very low online penetration and presented a huge opportunity. As we look at the demographic shifts that are happening, not just leading up to when we started looking at the space, but for the next 30 years, you're talking about 2 billion new learners. And 1 of the things that struck us about that is the physical infrastructure of the West couldn't possibly keep up to this tidal wave that's coming. It's convenient this slide is done in blue. 2 billion people that want access to upskilling and reskilling and also new learners. One of the things I know, everything is down and dark in the world, but 1 of the things that I like a lot about this data is that number on the bottom right, 400 million people will be removed from the no education bucket. That global need, we feel very acutely in what we consider our markets, the growth markets, be it Africa, India, Southeast Asia, right? The physical infrastructure, if we see strain in Western markets, in more mature markets, it's going to be even more extreme in growth markets. Another trend that we noticed is the lack of talent. We think about some of the secular trends that are driving this industry, the lack of talent is especially notable in tech and management. And again, we think about how will the institutions that many of us grew up with address this kind of big need. And again, as a global operator of companies, we feel this problem also very acutely. A lot of our operating teams are struggling for talent in the areas highlighted here. We take those secular trends and think the learning model and education has to change. And that will be both on the learning model side and linked to that, the economics for the sector. We think the world will move from more theoretical to practical learning, shifting online. And instead of being, frankly, in venues like this, more personalized and self-paced. As a result, a lot of the economics around the sector will also change. It'll move from -- we've come from several decades of heavy government investment in education. I feel like that's going to move more with the individual and be more private in nature. And instead of being more of a luxury good and a high fixed cost with a higher level of accessibility. So how do these trends play out in terms of what we see in the businesses themselves? And we think about work, the evolution of workforce learning. For those that know our group, we started with investing in consumer platforms and workforce education. At the time in the mid-2010s, it was very transactional in nature. And the monetization was structured as such the -- didn't feel like a business that had a long tail to it. What we're seeing now tied to that mostly company needs, frankly, to upskill and reskill their talent, we see greater investment in products that will be enduring in nature in companies and have much more long-term monetization, long-term contracts and better economic models. When I've talked to some of the folks in the room about the space and what's happening with EdTech and especially workforce education, a lot of people ask me, well, given the world seems either in recession or depending where you are in the brink of recession, isn't this a luxury good that will fall away? And this is one of many surveys that we've seen out there. When you talk to L&D professionals even in the face of a global kind of macro slowdown, they say this is one of the areas of our budget that we're not going to cut. So that brings me to the portfolio that we've assembled today. Again, we first started looking at the space in 2014, first invested in 2016. Again, started with consumer-facing platforms, be it Udemy or Brainly, but then quickly recognized that some of the more compelling economics existed on the workforce and higher education platforms. To date, we've invested $3.8 billion in a portfolio of 12 companies. And now I'll shift gears to Stack for a moment. And for those who are familiar with Stack Overflow, and Prashanth will come on in a moment and talk about the company itself. It's not naturally considered an education company. In fact, when I first reached out to Prashanth to have a conversation about Stack, and I introduced myself as a person responsible for education investments, I'll talk about it later, but he didn't take my call. And it took a couple of conversations around it aligned with some of these secular trends that we talk about to say the learning institutions of the future will not look like the learning institutions we have today. And again, he'll talk about his business in more detail. But one of the things we asked from here from this great starting point that he'll talk about, how do we continue to grow the company, grow the community, but also push on this path to profitability? Prashanth will talk about some of the business models that they have in place today that are all rooted in this very strong community. And long-term margin ambition for the company. It's -- we're still in some ways in the early days, but we can see a path to plus or minus 15% long-term margins. And we expect that will lead to significant value creation, right? So the value that we have today for Stack is about $1.5 billion. And again, Prashanth will talk about the specific products. It's a mix of 2 different business models today. There's a very fast-growing Teams product, which looks like a classic SaaS business, and also an advertising business that's tied to very vibrant community of 100 million of the most valuable people on the Internet, technologists. And with that, I'll hand over to Prashanth.

Hello, everyone. Thank you for your time. Wonderful to see everyone here and talk a little bit Stack Overflow and give you a little bit of a deep dive on our company. So my name is Prashanth Chandrasekar, I'm the CEO of Stack. And let's kick off with the numbers very quickly. Just to give you a sense of who we are as a company. So we are the world's largest software developer community and platform. We serve close to 100 million monthly visitors from all around the world. The reason why we're so popular is because we have about 50 million questions and answers on every possible technology topic. Anything that you read in the news today, whether it's cloud technologies, programming languages like Python, scripting languages like Java script, cybersecurity topics. All of that knowledge exists on Stack Overflow. It's existed since 2008. It's been compounding since 2008 as a knowledge base. And over 14 years, it now has driven an impact that's very, very meaningful. All this information has been accessed 50 billion times all around the world. So all of this makes us 1 of the most popular websites in the world, top 200 based on traffic, based on similar Web. So we're really, really -- this is the foundational part of our company. This is the community. The health and growth of this is really where we differentiate ourselves. It is a competitive moat of our company in many ways that gives us the competitive advantage that we -- that I'll talk about here in a second. Our presence, by the way, is absolutely global. We exist in about 179 countries. Obviously, the U.S. is a huge part of our traffic. Western Europe for sure. And of course, India, as it's already been mentioned a few times today, a huge population for us. Brazil, other parts of South America. So you'd be hard-pressed to find a software developer or technologist in the world that has not heard of us. In fact, I would challenge all of you to go back to your companies and ask your own technologists, your CTOs of your banks or maybe ask the developers who are in the action who are definitely going to have a very strong sense of good will for our company. And fundamentally, we talk a lot about secular shifts, right? And Larry talked a little bit about this where education, especially given how much of it is going online, even though the penetration rate is quite low, especially in technology, 70% of developers are learning to code through online resources. So this is really, really exciting. And this has really been propelling. And by the way, these percentages have been going up very meaningfully. It's gone up about 10 percentage points in about a year since 2021 to this year. We conduct a lot of surveys on our end. And if you think about the various sources through which people learn how to code, Stack Overflow is absolutely one of the most prominent places. Just short of technical documentation, which is sort of the raw truth, if you will, which is out there. But Stack Overflow is the easiest way for people to access knowledge when they're having an issue, when they're stuck writing code and they typically get unstuck when they come to Stack Overflow because it has a very specific answer to solve that problem in their workflow. So let's talk about the problem that we're trying to solve, right, given all those sort of background secular shift points. So the problems, especially when you talk to CTOs and CIOs who I have the pleasure of speaking with literally on a weekly basis comes down to 3 things these days. So Larry talked a little bit about in the context of talent, and this is absolutely an issue, right? If you think about the supply/demand issue and technology talent, to do all the things that even in many of the presentations today. Romain mentioned earlier this morning about all the initiatives he is driving from a technology standpoint, ML, moving to a microservices architecture, et cetera, all of that requires people. And if you look at even the jobs report in the U.S. recently, there are tons of jobs available, right, despite the layoffs and so on. So there's absolutely a supply/demand imbalance, especially as it relates to technology talent. So hiring, onboarding, reskilling people within companies to do the work that needs to get done is a big driver. Number 2 issue is executing these big transformations, whether that's moving to the cloud from your data centers, whether it's unlocking the value of your data platform through machine learning, whether that is improving your security posture to prevent bad actors from accessing your systems. All those things are pretty big initiatives within companies. And by the way, many of you banks are customers of ours, by the way. And so we know all the big transformations that you're driving. And these are -- this is a huge, huge focus for CIOs within organizations. And then finally, COVID, even though it was -- you could talk about all the things, obviously, a lot of negative things that came out of it. But one of the things that did happen that is a permanent shift in our opinion is the move to hybrid work. Whether or not you believe in fully remote or not, the reality is that people are going to be working in very distributed ways for a long time to come. So those are the 3 big challenges. So let's go into each 1 of these in a little bit. So let's talk about hiring, onboarding, reskilling and retention. So what can companies do inside their companies, things that they can actually control to make sure that they actually make a difference on this topic. Based on a lot of research that we conduct, we believe it comes down to 3 things. It comes down to number one, giving employees, especially technologists within companies, opportunities to learn and grow. They're not learning, they're going to leave. Giving them the opportunity to be truly flexible in their workplace, how they do their work, where they do their work, when they do their work. Giving them truly that flexibility, especially for technologists, is super critical. If you don't do that, they're going to leave. Number three, productivity, is that if you're going to be distracting technologists who are notorious for being known to sort of stay in the flow or not context switch -- if you're distracting them with a lot of sort of inbounds from people, people are knocking on their shoulders asking for new information all the time or the same information, rather, all the time, that's going to be distracting. And that's not going to be great, and they'll want to leave. So these are 3 things that technology leaders within companies can absolutely control to make sure that they keep their people and make sure that they're happy. And I'll talk about how we are solving these problems in a second. The second big issue is around these big transformations. So as we've already talked about, these transformations are very large scale: cloud, big data, machine learning, DevOps, a big agile story that's going on -- how do you get faster and closer to your customers? So you're releasing features very quickly. Security clearly makes sense, right? So all of these transformations are very, very meaningful, like I mentioned. Small example, Amazon Web Services, a space that I operated in right before Stack Overflow, that business is close to an $80 billion business growing at a run rate -- that's an $80 billion run rate business growing about 27% year-on-year and only about 30% of enterprise workloads have actually moved to the cloud. So just imagine the scale of these transformations. They're just still pretty fairly early in the innings, but a lot of companies are just embarking on these journeys. And number three, managing distributed team environments. It's easy to say, hey, hybrid work is the future. But the reality is that what has happened is that there's just been a ton of distractions and cacophonous environments that have been built within companies now because of the distractions of Slack messages and Microsoft Teams messages and text messages and Zoom calls, people just can't seem to get out of meetings online, and it's absolutely inefficient. And so especially for technologists, it is super critical for folks to stay in the flow state, as we like to say at Stack Overflow. And this is what is causing a lot of people to leave companies, because they just can't take it anymore, right? So this is a very key issue that companies have to solve. So the good news is that there's actually an answer. And it's an answer that we talk about a lot, which is to focus on the developer experience. And so these 3 issues, while they are sort of core to sort of making sure that you actually can control the environment, developer experience actually is some of the topics that I spoke about: flexibility, learning, productivity, these 3 issues, if you focus on it, then you're able to make sure that you keep your people happy. So now let's talk about Stack Overflow and our products as it relates to these issues that I just mentioned, right? So firstly, let's start with our vision for our company. And it's all about making sure that the current and next generation of technologists -- and again, Larry mentioned the younger generation that's from all around the world looking to become proficient in technology. And that's a huge secular shift for us. And so we want to be able to serve not only the current, but the next generation of technologists and to make Stack absolutely the destination, even more than it is today, right? And so that is where we're going as a company. And if you think about the same -- the wheel that I just explained, the 3 challenges and the developer experience is the answer, our products, specifically, our SaaS products, Stack Overflow for Teams, which I'll explain in detail, is -- it touches each one of these issues in a very real way. In addition, all our advertising products, including products like our employee branding capability, where -- which specifically speaks to companies being able to hire developers by promoting themselves as great companies on our platform, it's another great way to make sure that folks are solving this hiring and retention problem in addition to, of course, all the other ones. So there's a full map where we basically map almost directly to these issues that CTOs and CIOs are faced with today, right? So we're sort of at the right place and the right time. And to summarize, so who we are as a company, what you see on the left here is what I covered about the public community. Our 14-year legacy of building this massive knowledge base, this great competitive moat in the words of Charlie Munger, and that is the foundation of the company, 100 million technologists going through our storefront pretty much every day, right? And we have, obviously, as a function of that traffic, we have a great advertising business that has got a range of advertising products that I'll explain, but that is obvious given that we're such a popular website. But the primary business model for us is the most resilient revenue source that you can imagine, which is a SaaS, Software as a Service model, which is Stack Overflow for Teams. And that is effectively providing a private version of Stack Overflow for companies to share and collaborate information within their organizations -- many of your organizations. And so we'll go into each of these in detail. So let's talk about the advertising business first. So the advertising business, we have so much information on users, their history, how they've actually accessed -- they asked a question 2 years ago, they answered this question this year. They are a top recognized member in the Python community within Stack Overflow and so on. And then companies really find a lot of value engaging directly with these users. So a company like Google Cloud is building its subcommunity on Stack Overflow. Google Cloud has 250,000 questions and answers on Stack Overflow. And they are also -- they have established a walled garden where they've got members of our community that are opting into the subcommunity, becoming members of it as recognized members, they are interacting directly with these folks to get things like product feedback. They're announcing product releases. They're able to showcase new announcements and also sort of endorse answers in the community, all in our subcommunity product called Collectives on Stack Overflow. Pretty, pretty phenomenal. We've got other advertising products, a range of them, those of you that are familiar with that model will recognize many of these, whether that is all the way at the bottom of the totem pole, banner advertising, to more native capabilities like direct-to-developer ads to sponsorships like podcasts and newsletter sponsorships. Our podcasts are one of the most popular podcasts in the world -- it goes out to millions of people. And so all of these are also great opportunities for people to get access to our user base. And then finally, our talent or employer branding product, as I mentioned, is a great way for companies to advertise about their own capability on Stack, as in their company and why it's such a great place to go work there. And then, of course, we don't do things like job listings, but ultimately, it's to, again, promote their company so they can go and apply to these companies on their own websites. And this has been an amazingly resilient business. You'd think in this economic cycle that you would see weakness. But the reality is that the employer branding business is far -- has far exceeded our expectations because companies just cannot afford not to have their brand out there as a great employer. So very, very great, resilient advertising set of products. Now let's talk about teams. The format that you see on this screen here is the much loved format of Stack Overflow that's been used by every developer for the past 14 years. So this product, this is, I think, a key point is already in companies. right? So it's not like we're a random company going and knocking on their door saying, "Hey, we have a product to sell to you." This product exists in companies. And it is in a much loved format that people have been adopting for 14 years. And they've been trained with muscle memory to use it. And so when we call into companies, they're very happy to talk to us in general. And it's also not because of the goodwill that we have gained over the past 14 years, but it's solving real problems, right? It's able to really attract, onboard and retain the top talent that we're talking about. We're boosting team productivity and collaboration through all the gamification and breaking down silos across organizations to make sure that people are answering questions, you're identifying subject matter experts in a different part of the world. And then you're ultimately accelerating innovation within your teams because you're unlocking capacity of your technologists. So they are then able to then go and work on the things that you actually -- they care about within the companies, all the things I mentioned. And so that's why this is such a powerful capability. If you think about the technology universe, there are many capabilities that companies have sort of pulled together as the new technology stack. It includes cloud technologies, it includes DevOps technologies, data technologies, real-time ChatOps, things like that, project management tools. But then this whole space around knowledge sharing and collaborative knowledge sharing or even internal communities, whatever you want to call it, has been a very fragmented space. There's been documents flying around, e-mails flying around, Wikis that have been built internally that are vastly out of date, typically. And technologists, especially, they come to us as "burn victims" because they just have not been able to keep up with information in an efficient way within companies. And it's been just a few years since we launched this product. Microsoft came to us back in 2017 and said, "Hey, we love Stack Overflow, but we'd love to use this capability internally." And we basically built this business effectively from the ground up, where we have all the components of a fast-growing SaaS business that have come together with a great leadership team that has been assembled from all sorts of SaaS companies that you've -- there again, all the top Tier 1s. We have hired people from all the top SaaS companies that you can imagine, but everything with sort of the Stack Overflow DNA. And the logos that we've assembled here are only a small fraction of the names that are customers of ours. We have close to 15,000 organizations leveraging Stack Overflow for Teams just in a few years. And we're only getting started, as I'll talk about. If you look at a few of these metrics up top, we have very healthy bookings growth rates, about 68% year-on-year. We have about -- what is net revenue retention for those of you that are aware, that's making sure that every dollar of revenue that we generate, how much does it grow over time. And that is at 115%, very much in the zone of a healthy SaaS company in the context of the public markets. And our ASP, or average selling price, is about $289,000, as in, we go into one of these companies, and the first deal that we strike is around $289,000, to get started. So what's next? Let me give you a preview a little bit about our product releases here, and then we'll talk about our financials. So a couple of things that are coming up that you will see pretty soon is that in the spirit of making sure that we even had even more value and engagement on our product and make it even more -- and to make it stickier, we will be launching something called Communities on Stack Overflow for Teams. So what that means is a company like a bank that has perhaps a corporate bank, an investment bank, a corporate retail bank and investment bank and some other sector could have all the database experts at that company across divisions effectively form a subcommunity like this so that they can collaborate and share information on, "Hey, this is how we launch an AWS instance within the retail bank and the investment bank," all of them are able to then share information together, be part of that internal community and that drives up a lot of engagement and breaks down silos. The other thing that we're doing is taking a lot of the external public Stack Overflow information, giving users the ability to curate that content into their organizations and share it with their colleagues to drive -- obviously, for them, it's sharing of information that's critical. And of course, that drives a lot of fast user adoption from our standpoint. And then ultimately, Topic Collectives, which is the ability for companies to sponsor certain category areas on Stack Overflow. So imagine a space that says security and you've got all the security content, people opting into that space and then you have sponsors. There are thousands of security companies who want to sort of get in front of developers and developers are the ones that are making recommendations to organizations on which technologies to use, right? So imagine being able to sponsor these areas that we will form. There can be literally hundreds of areas. So that's another exciting thing that we're thinking about here in the very future. So let's talk about some of the financials. So firstly, markets or market sizing, I should say. So we generally operate -- we can triangulate multiple data points. But if you look at the collaboration market, the DevOps market, all of those are growing very rapidly, and they're very large ones, right? We're talking $10 billion or so in size. If you think about the user base, we have about 450,000 users on Stack Overflow for Teams today, our SaaS business. If you think about the number of developers that exist in the world, there are about 28 million developers in the world. If you think about the number of technologists that exist in the world, that includes people like data scientists, cybersecurity experts, you name it, right, all the other set of areas, DevOps engineers and so on, that's about 100 million. And by the way, that is the size of Stack Overflow's community, about 100 million monthly visitors, as I mentioned earlier. And then finally, you have about 1 billion knowledge workers in the world. And that includes many of people who are on your teams, including finance folks that are writing Python scripts to do their work these days, right? So everybody is sort of becoming a technologist in some fashion. So all of this creates a massive amount of a number of users for us to be able to sort of onboard onto our product. If you look at it in the context of companies that exist, even that is a very large market for us. So we have about 1,000 companies who are paying customers today, even though we have 15,000 organizations leveraging it through all our -- including our freemium product. But just out of the 1,000, that compares -- it pales in comparison to the number of companies that exist that we're focused on, right? So we have 4,000 super strategic companies. These are big ones in the Fortune 100, et cetera. There are about 36,000 enterprise or mid-market companies that exist in the world, and there are about 720,000 SMB companies that exist in the world. So again, we have a very, very small fraction of this. And if you look at -- if you do some rough math around how many users exist in each one of these and the average -- and sort of a very conservative penetration rate. Out of the $24 billion or so of the market size, at a minimum, it's about a $2 billion market opportunity for us to go after, just in terms of a very conservative number. So great underlying sort of metrics. If you look at our general economic model, it's around land and expand. And this is what I mean by that. We land in a global financial institution. This is a real customer. It's one of you sitting in the room, right? We land at about either that $280,000 or so number that I mentioned earlier -- in this case, we landed about $400,000. And over a few years, we're able to expand into multiple teams within that organization. And this particular account has gone from $408,000 to about $2 million in annual recurring revenue. And as you can see, the number of technologists has expanded. Similar stories. I can give you plenty of these global software provider, a big tech company, global tech company in the world, started at about $150,000; are now at $1.5 million compounding. Global telecom provider, started about $400,000; sitting at about $2 million or so, $1.9 million. Big consumer financial services firm, started about $450,000 just a couple of years ago, now sitting shy of $1 million. So this is a very standard land-and-expand model, which is a really great leveraged way for us to grow into profitable revenue. And this just to summarize, is the way we do it. We land in an initial software development team, given all the goodwill that we've generated over the past decade, and that quickly expands into year 2 and 3 into other software development teams within their company, typically globally. And then in years 4 and beyond, we start expanding into other technologist organizations, and it sort of becomes this wall-to-wall type of arrangement. And that's why we were able to generate all this seed expansion and value-added services. If you look at the fundamental financial points about our company, the LTV over CAC, or lifetime value over cost of acquisition, is very healthy. It's about 3:1. And that is -- that's fully loaded sales and marketing costs, et cetera. And that is, overall, given how sticky our customer base is, given the net revenue retention I mentioned, a very healthy number. Our ARR, or annual recurring revenue, which is a great compounding force, has grown to about $50 million during the halfway point of this year, and we're well on our way to sort of continue to grow in that spirit. And we're, again, very much in our early days of growth. And so we're just starting out, but we're already at a fairly significant number. And remember, we only started this business in about 2018 or so. And then finally, Rule of 40, which is a fundamental SaaS metric is all around -- it's the sort of the sum of your revenue growth rate and your EBITDA margin. It's -- the goal, of course, is to go past 40% and we are currently at about 20%or so. And just as a quick point here, we were actually profitable as a company in 2018, 2019 and 2020. So it's not a foreign concept to us. Very deliberately, in 2021, we entered an investment year to go very deeply and to invest in our team's SaaS business because of the massive opportunity that we -- that I shared with you. And it's a very specific move that we've now sort of made tons of investments on the go-to-market side, on the engineering side, et cetera. And now it's about the path towards profitability. It's the path towards Rule of 40, as I just explained. And so to summarize, we have a huge community of engaged users, about 100 million, that's been built over a 14-year period that exists and being used within companies. We have absolutely a willingness to pay for our products, specifically our SaaS product and of course, our ads products. Only about 450,000 users and only about 1,000 companies are paying for our products at the moment, so a long way to go. And the market opportunity is massive. It is truly massive. So we're just super excited about this opportunity in front of us and for us to build a massive business alongside Prosus and our colleagues. So with that, I will conclude, and I'll have Larry back on.

All right, everybody. I think we know the drill at this stage. Will asks the first question, and then everyone else follows. We have one right behind Will there.

Chris. Chris from HSBC. Just a quick one from me. I think I have a better understanding on Stack Overflow now with respect to advertising and the proposition that Teams brings. What I don't really understand quite yet is how something like a ChatGPT could influence your business. Maybe you could talk about that. I'm sure you've tried over the last week. That would be interesting.

Yes. No, great. For those of you that didn't hear that, the question was about, understand Stack Overflow, but there's this -- all this AI work that's happening around OpenAI, for those of you that have been paying attention to that, over the weekend, there was a release around something called ChatGPT, where you can go and very quickly search. It's kind of like a Google search, but it's responded to by a machine learning model. So we actually were quite excited about it because it presents a tremendous opportunity for Stack in a way that we are absolutely evaluating all these things all the time. So absolutely, we have a team, and we actually work very closely with the process AI ML team on the subject as well. where we've actually got some remnants of this in our own sort of community. I'll give you a small example. We built something called The Unfriendly Robot a few years ago. And so it is specifically a machine learning model that goes and skims the 50 million questions and answers and identifies any sort of untoward comments and flags that to the moderated community in our company, right? So that's a small example of us using ML technology. So while that is -- it's fantastic, this also gives us a great opportunity to think about as we think about this technology maturing, it's not yet completely sort of at a place where I think we could trust it to do sort of even though some of the use cases have been interesting to watch like, "Hey, like can you create a legal contract for us to a -- merger agreement between 2 companies," and it will produce something. It looks really, really powerful, right, in terms of it. So the question is that as that -- the trust increases in our ability to say, okay, the answers are correct or this is actually returning something that's really powerful, I think we will look to integrate it into what we actually -- what we think about in terms of our paid products and potentially our public platform. But it's very much a -- it's a great opportunity for us to leverage.

All right, Will. Can't stop him.

It's Will Packer from BNP Paribas Exane. A couple of quick ones from me. I suppose one thing that came less clear away -- less clearly from the presentation was the path to profitability, both for the EdTech business as a whole and Stack Overflow. Could you just talk to, for both the unit of Stack Overflow and the wider Edtech business, when we should expect you to breakeven what the key drivers of that improving profitability will be?

Yes. Makes sense. Do you want me to do Stack first...

Yes. Stack first.

Okay, yes. So on Stack, we generally have a very defined plan to -- as I mentioned, we're in an investment year that we just -- we sort of spent a bunch of time and effort making sure that we invested in the right components for the SaaS business. So the 3 ways in which we will get to the -- from a path to profitability standpoint. Number 1 is that we can generate a lot of scale with our partner alliances. And that's a huge motion. We haven't spent a lot of time publicly talking about it, but we're a big partner of Microsoft, as an example, right? So we've invested to be part of their marketplace. We've got teams engaging directly with them. So they have a huge channel motion. They're in pretty much every company you can think of -- so we have our own sales team working with their sales team, along with our product in their marketplace that basically drives a ton of scale. And so in terms of CAC, that should reduce the CAC very meaningfully. That's number one. Number 2 is our land and expand model. Because of our ability to go into companies because it's already being used within companies and we have such great goodwill, we're able to go in and really very quickly expand seat expansion. So for us, it's a very specific, even though we're already at 115%, that's only scratching the surface, because that's what's happened organically, right? It's happened organically to go from developer team to developer team. But the ability for us to go from developers to technologists and even to the knowledge worker area over a multiyear period, that's a very high-scale motion. It doesn't take a lot of investment to do because it's a very viral product. It has a lot of great network effects, and that, again, should reduce CAC, especially when you focus on our -- and our long-term value should increase because we are focused on our existing customers. And then thirdly, we are focused on replicating -- almost 80-or-so percent of our business is U.S. in terms of our SaaS business. So we have not really done a huge amount of international expansion. We've only sort of begun this in Western Europe at the moment. We don't have much of a presence in APAC as an example, in Australia and so on. So all of those should provide us with a tremendous amount of operating leverage because we've got the same fixed costs around the product, which has been built, and it's basically, it's a rise and repeat model. So for us, yes, we will incur costs in terms of sales resources locally, but it's a far less cost compared to what we actually saw in the U.S. business. And then more broadly, I'll just mention one other point is our ads business, it subsidizes the growth of our teams business. Our ads business, if you look at it on a P&L perspective, is actually a very -- extremely high gross margin business, right? And you'd be surprised. And at the same time, the ability for that to ultimately fund our overall -- our SaaS business is another great lever that we have just foundational as a company. So those are some of the thoughts.

Yes, just to piggyback on that. The -- if you think about our broader Edtech portfolio, we have Stack and GoodHabitz that are companies that we control, and we can set budgets for. The other 10 companies are minority holdings in some cases, profitable and meaningfully so already like in the case of Skillsoft. Some of the other ones, we -- given those minority positions, we see a path to profitability for each of those and fully funded business plans. So it's a little bit the matter of like time passing and as they each sort of follow their own journey.

All right. Let's -- okay. We have one there in the middle. Throw it. Do it. They call it Catchbox for -- call it passbox.

Sebastian Patulea from Jefferies. I've got a question regarding the enterprise product for Stack Flow (sic) [ Stack Overflow ]. So now it's a collaborative medium where employees within organizations, they can share information. And it looks like you guys are providing them great value because retention keeps increasing. And it seems like $300,000 is great value. My question is, can you guys get to a certain point where -- for example, there was a client that where they were paying you guys to $1 million. Maybe 3, 4 years from now, they'll give you guys $5 million, and they will be like, okay, can we actually do this in-house instead of giving these guys $5 million per year? And then the $5 million goes directly to $0. Can you guys become like a victim of your own success in a way just decided to do it inside?

Got it. Yes. So it was echoing a little bit. I think I got most of that. I think the crux of your question is, can companies decide to build this internally and replace something like Stack Overflow for Teams?

Exactly. If it becomes too big, it goes to $5 million, $10 per year. Let's just do it in-house and then it goes directly to $0.

Sure, sure. No, great question. So the interesting thing about this is that companies -- this is not the first time we've been talking about knowledge management, right? The knowledge management has been actually one of these like an old school category for a long, long time. And a lot of companies have been building a lot of internal Wikis to sort of maintain information. And in fact, those are the companies that come to us because they've just not been able to replicate what is the secret sauce of Stack Overflow -- if any of you go to Stack Overflow, the community, you will see that there's a whole gamification process around upvotes and downvotes and badges. And it's prompting users as the expert -- so you're the identified SME, to go and answer this question that Larry has asked yesterday. Or you're a brand-new person that's joining the company, here are the 6 pieces of information you need to know to be onboarded rapidly as an engineer to be productive. So all the functionality that's there, there's only one Stack Overflow for a reason, right? Because there's something -- there's a virtuous cycle there that brings together all that functionality in a way that makes it really, really powerful. And the adoption, especially within companies, is very, very significant. The technologists have -- I think you go talk to any technologist, they absolutely despise documentation. There are memes running around about the subject on Twitter all the time. In fact, we posted one recently. And so you have to be in the workflow of a technologist, and that's what we do. We're in their daily workflow, right? And so for them to go and say, how do I do this on Amazon Web Services? The answer is always going to be on Stack Overflow. And when they do that, they're going to be able to very quickly upload a question and share that with a colleague, and that's the differentiator. That's the ability for us to sort of be part of that workflow. And that's not going away in any way, right? There's still will be -- it will be very hard for companies to replicate that on their own. They can certainly try.

Okay. That's a perfect timing. And it looks like we're out of time. So with that, thank you, gentlemen.

Thank you. I appreciate the questions.

All right. We're on to the next session, which is food and Larry's so good, they named him twice. We're going to bring him back up, but let's roll the video first. [Presentation]

Back again. This time makeup was faster. Kind of building on -- and I promise not to do this too much like a mad lib on the last section -- but building on the Edtech conversation, similar theme for us as an investor around food. Again, big societal need yet to be fully addressed by technology. And for those who've been around our business for some time, you'll remember that we made our first investment in food in iFood back in 2013 and while I don't think it had the formal venture kind of nomenclature, it would be the equivalent like a Series A investment. So this was -- Bob alluded to it earlier. So it's truly a venture investment that I'm now proud to say we are 100% owners of. But that started us -- we studied this business from iFood up. We have a bunch of experience with consumer marketplaces and a lot of exposure to Brazil but got to see this sector through iFood and then, of course, invested in Delivery Hero and Swiggy, among others. And as we've studied it, the sector focused on this essential human need and how we satisfy the different players in the space. The winning platforms will need to create value for consumers, drivers and restaurants. Again, coming back to TAM, the TAM is sizable today: plus or minus around $600 billion. And with a reasonable CAGR over the next 5 years, you can see that space kind of 2x at the core. Obviously, there's a remainder of the slide that's wide for a reason because the adjacencies that are available to us are massive, right? You can talk about 20x the size of the TAM today, if you consider global restaurants and grocery opportunities that are addressable to us because we have that deep understanding of consumers and local logistics. Also opens up other adjacencies, be it in logistics services, fintech, e-tail. Fabricio will talk next a little bit about some of the things that they're doing from a fintech perspective. And it's important to note, sometimes when people put these, oh, here are the adjacent opportunities up and you kind of raise an eyebrow and say is that really real? It's important to note that 2 of the businesses that I won't talk about today, eMAG and Takealot, got into food delivery from an e-tail starting point. So these adjacencies are very real, and the lines between these spaces are in many ways, blurry. Everybody loves the map. We like the space a lot, but it's -- we shouldn't be confused that this is a very local game. This is not a global game. And we'll talk a little bit if you go deep into these products and develop an understanding of the companies, you'll see for those I know many in the room are -- also study Delivery Hero. Delivery Hero is an amalgamation of local brands. this is fundamentally -- they compete, they operate locally. And a standard joke I make here usually is if you're getting your pizza delivered across border, it's probably not fresh. It's local, local, local. The last time we met, I presented a version of the slide that talked about the evolution of the category, right? The -- when we first got involved with iFood, it was very much food delivery 1.0. In fact, a good chunk of the orders back in 2013 were done by fax, which is kind of ironic given the AI ML question. Shows how far the world has come in the last 9 years. Started as a third-party marketplace. And the last time we met, we were -- as I saw it, squarely in this kind of food delivery 2.0 with the emergence of native first-party players. And presenting to many folks in the room said, look at the opportunities that are sitting out there with Version 3.0. And some of you said, "Well, wait, can we go back to version 2.0 because we're not sure you can make money there," right? Because the visibility that many investors had was just to the native 1P players and you'd see their financials and say, how can they possibly make the math work? Now -- and you'll see more in some of the upcoming slides, I can comfortably say we've got proof points, real proof points, and you'll see them that Food Delivery 2.0 with 3P and 1P is profitable. It can be run profitably. And we're taking the same disciplined approach to the next -- to Food Delivery 3.0. Since last time, we've grown this food revenue 6x. It's obviously a testament to all the local operating teams and the work that they've done. And there's some natural questions, hey, how much of this was demand being brought forward from the pandemic? There was certainly a lot of that under the surface, but the growth continues, even though we're well past lapping the pandemic. And again, we've established profitability proof points. And I'll throw 2 of these up here. So one is iFood. iFood's been profitable. This year will be the third year. Again, something that many folks in the room told me this couldn't be done. It's -- we're profitable and comfortably so on the iFood side. And Delivery Hero is breakeven this fiscal year in their core platform business. So now what next? And with this focus very much on quick commerce and Food Delivery 3.0, and we start with kind of the right hand of this slide. right? You think about all the other products and services that you can offer to a consumer on the back of that logistics and data backbone that's been built. And I mentioned this a lot, but it's hard to overstate how important the relationships and the data and market understanding we have at a local level through those leadership positions, this is where leadership positions really matter. In some of the questions that I often get and got some today during the break were around, "oh wait, isn't the kind of air coming out of quick commerce?" And what you're seeing is capital has dried up. This is a -- these are very hard businesses to build -- these local logistics businesses at national scale and in some respects global scale. A lot of the native start-ups popped up in a world of cheap capital. The minute that, that dried up, all of a sudden, they're like, "Wait, I don't yet have enough customers. I don't yet have enough logistics infrastructure. I don't have enough data to make this viable." This is something that is still available to us because we have that starting point. And we're taking a similar approach to grocery and quick commerce as we did to moving our businesses from a third-party to first-party food delivery, right? There's still a big growth opportunity but really thinking about how can we leverage that starting point and find the most profitable version, the most economically sensible version of this model. And if we can't do it with a food delivery starting point, then nobody can. We have such a built-in advantage from that starting point. We're seeing this play out across our 3 food delivery platforms. You see we basically doubled the scale of the businesses over the last year. It's important to note in the slide a little bit of a nuance -- there are different business models in play here. In some cases, based on the infrastructure that exists in the market, we might have a marketplace, we might lean more towards a marketplace, an Instacart type model; in other cases where dark stores make sense, we'll go that way. So this is one -- another advantage we have, we don't have to be beholden to a specific business model as we solve this consumer need. And in terms of can this space be run profitably, there's a lot of data on the slide, but I'd really point you to the one on the bottom right. So Niklas and Delivery Hero are pointing to their performance for their 7 best-in-class countries that show their Dmarts basically running at breakeven -- so again, you know that this can be run at scale in multiple geographies, breakeven. Obviously, a lot of work to get there, but it's strategically important. And the financials will increasingly look better as the company scales. It's a similar story, building from Delivery Hero to how we see our business evolving over time. Core restaurant food delivery, we put a number of plus or minus 25% for profitability. It's important to note that it really depends on country and business model. For grocery and quick commerce, it's obviously -- it's grocery, so it's structurally lower margin, but we can see a path to plus or minus 10% margins long term. And we'll get to iFood in a moment, but we see significant value creation. And again, I can't say enough how excited we are to finally own the remaining slice of the company, valued at $5 billion today. We see a reasonably clear path to a 3x value increase. Fabricio would probably point you to more Brazil type number, a higher number, but driven off of value, both in the core food delivery business, grocery and also some of the adjacencies that we're excited about. And with that, before I introduce Fabricio, we're going to have a video to introduce iFood. [Presentation]

Good morning, Amsterdam. Hello, everyone. Hello, everyone. There is some problem with my microphone. Hello. I see some movement there. Hello, everyone. I'm Fabricio. I'm Brazilian. I'm going to talk about a Brazilian company, and we are required by law that every time we 4-1, we use our shirts. And the guy, they're very happy. I'm going to give the shirt for the best nice Q&A answers. So remember, everyone knows 4-1 yesterday. There is someone from Croatia here, Croatia? No, okay. So Friday, Brazil and Croatia 4-1 again, please don't miss the game. There's the guys from home here. You at home here, the best questions. You can see the World Cup final with the shirt we are going to win, my first prediction. I'm going to keep the shirt here. So you can remember that the winner of the World Cup are very happy, excited today. We can answer to any question today just because of yesterday match. Basil start to say, "Oh my God, what's happening here". Guys, I'm back here 3 years after the last Capital Market Day. Anyone here who was here 3 years ago? Raise your hand. Thank you very much for keep attending the show. That was what we were talking a lot 3 years ago. I've been here -- during the last session, everyone was crazy asking, "So you are a big 3P player, so we have a marketplace of food delivery, but you are going to 1P, can it be profitable? Is it possible to compete against the pure 1P players?" That was the big question 3 years ago, everyone was asking that all the time. And I want to start from here because I don't want to give you like a table and like some numbers. I want to give you a story about what we are building. I hope you enjoyed the last 3 years, and we can dream a little together about the next 3 years. So 3P going to 1P, can it be profitable? Are you going to keep growing iFood? That was the question that these 10 guys that raised their hand asked, okay? It took some time, but I'm going to answer it now. That was the chart 3 years ago in the last Capital Market Day. iFood was doing almost BRL 800 million of GMV, and we are entering the 1P, all that confusion that probably you remember. What's happened? First, 3P kept growing. So marketplace keep growing out a lot and became a very nice business. But that new idea, creative people doing 1P also grow a lot. So starting in 1P was really a good thing for iFood. We kept growing from BRL 800 million to BRL 2 billion, but that new business we have launched 3 years ago also grew a lot, and now is almost 40% of iFood share. So it was really good that you stayed connected, that we kept investing in 1P, and we got a lot of growth over the last 2 to 3 years. However, there is much more ahead, and I'm going to talk a lot more about that over the next charts. We grow a lot in the food delivery business, but we also, over the last 1.5 years, we started many adjacency business that I'm very excited about. So that's a new business line that you can see that's more or less 15%, a lot of business that didn't exist when I came here last time. Now we have ads, for example, that is super good, and we sell on top of grocery, very good results. The whole grocery business, the whole pre-commerce delivering 15 minutes with our own stores, a card, food cards, B2B services. So iFood today is much bigger than the iFood that you saw 3 years ago with many more products, and we are just starting. That's the story for today. And I know some of you, where is the light? Can you turn more the lights there? There's some people here that are not paying -- more lights to them. They are not listening to me. Lights. Then this guy here, looking to me, let's talk about how important it is not only what we are doing for delivery, but what we are building from here. So that's a little of the story which I'm going to tell you today. Start with 3P migrated to 1P with a lot of growth. Now we have a many new business, but most important, we have -- we are building an ecosystem where our existing products and brands and people and innovation can leverage what we are doing to create many more business around the original food delivery. If you start asking but -- and the food delivery, what are the numbers? I see someone there taking notes about numbers. So these are the numbers of the core food delivery. iFood today is 1,600 cities. We have a very high market share in Brazil. We are doing this year more or less 750 million deliveries of food specifically and the 1P proved a very good bet. But I worked before getting to the big question that you want to answer to highlight this slide. And I know this is an investor presentation. I don't like to talk about these slides. I think you should put this slide in your models. It's much more than a business. It's much more than someone asking, this asset, it's much more than an asset. It's a company with an amazing culture, a very recognized brand all around the country with 6,000 people that behave as owners of the company, and we are really just starting. So in this slide, you can see in this last research that was from a few months ago that iFood was ranked as the #1 most-loved brand in Brazil on top of WhatsApp, Coca-Cola and other great Brazilian brands. We also, during this year, won many very nice prizes, like the most -- more innovative company, the more innovative business, the best customer experience, the most sustainable company. We have a long list of prizes that is the result of a company that is really connected to our proposed, that is really connected to build something 10x bigger. So my message to you is today is, I'm extremely excited and optimistic about what we will build over the next years on iFood. We already built a very nice core that you saw growing very fast, that is food delivery, but the best parts are ahead of us. Then the guy of the model there asked. And can you be profitable? I know you are just telling nice charts because you don't want to talk about that. No, wrong answer. You lost the shirt. Yes. Obviously, we can be profitable. We are profitable. And we are just starting on that, too. So this is, on the food delivery business, our numbers for the last 5 quarters. We were investing much more, having some losses 1 or 2 years ago. We reverted completely this year. We are more or less today at 10% EBITDA margin in the core for delivery, and growing. So I'm quite confident that we have a good business, a profitable business, and we have a lot of growth ahead. Again, the big question 3 years ago was, is it possible to do that with the 1P business? For sure, 10% margin is 1P plus 3P. So all the businesses are profitable. We are running 10% margins. Food deliveries are profitable, and more mature business, but we still have a lot of growth and opportunities ahead. Why I believe we have so nice core that we can leverage? We can see here a few of the data that is nice to show to you. In terms of monthly unique buyers, we grow from 7 to 17. In total, we have more than 40 million, I think around 45 million customers buy iFood uniquely and paying on iFood per year. Every month, almost 17.5. What I really love is the monthly frequency. We have -- the monthly frequency over the last 3 years went from 2.9 to 4.2. I don't have what I'm going to tell you in a chart, but I want to reinforce to you. If I look to the frequency of the user that has 6, 7, 8 years on iFood, it's around 70 purchase per year in average. We have customers that do 500 to 700, 800. But in average, 70. If you look to the customers that joined the company over the last 1 year or 2 years between 5 and 10. And for every year, it increased from like 5, 10, 15, 20, 25, 30 to 70. Why I'm telling that to you? Because what we have is a machine that every year that go by, that customer that is using that for 1, 2, 3, 4 years, it uses more iFood more frequently, and is happier with the service they are getting. Therefore, only with by existing 45 million base customer, I have at least 25 million, 30 million customers that we are going to see, keep growing their frequency over the next 1, 2, 3, 4 years. That's why I'm so excited. I'm kidding. I'm always excited, but that's why I'm especially excited today. Average order value is also going up a lot. What I want to tell you this story today, we invested a lot, and I know some of you criticized and why we invest so much in food delivery? Because we are creating this base. This food delivery base where we're creating assets like our app, artificial intelligence, an amazing culture, and the demand like 45 million active customers to have a viable and good business. But starting now, it's much cheaper and faster to create new business and get to a good payback faster and cheaper because we can leverage all this core. That's what I'm going to show you quickly. First, besides our core, we are doing groceries now. We started doing groceries just like a supermarket delivery. Now we have beverage, convenience, delivering 15 minutes, pharma. I always bet -- I never imagined that 26% of grocery would be pharma, but you see the customers are willing buying pharma, items to iFood, even pet food, they are buying on iFood Grocery. And we have a very strong growth in grocery, but it's still small comparing to the size of the grocery opportunity. The total addressable markets of grocery is bigger than food delivery. We have a very good solution, and we are going to keep making it grow for a lot of time. Also 70 NPS, what is a very happy customers. We have two types of grocery offers. So I have to show it to you because I'm sure some of the questions are going to be around that. We have the marketplace grocery, where we just connect a grocery store, just like the restaurants and they sell directly. We just connect them to the customers and deliver. But we have the quick commerce where we have some DAC stores, and we buy the things and we package everything and we sell to the customers. So we have these two models, marketplace and pre-commerce. I want to tell you very briefly what's the mature of each one of the models. First, on marketplace. It's growing well. You saw in the other charts. But the question that people are -- that is, how can I say, the fashionable question today is, can you be profitable very fast? This is the profitability structure in the more mature cities we offer. We started losing BRL 5.6 6, 8 months ago per order. Now we are breakeven, a little more BRL 0.4. This is on our more mature city cities, cities that we launched in 1 year, 1.5 years ago. We expect it to be breakeven with all existing customers in all cities by March 2023 in the marketplace business. So I'm sure it's a business that has demand. Customers are happy. It's growing. And it's going to be profitable on all existing users, all existing cities in 3 months. We are not overall profitable yet because we're still investing a little more than we are getting to get more users faster, but I think we can keep growing for some time. But as you can see, we have a lot of control on what is the profitability profile we can have on this business. And we are very small. I think we are #10 to #12 biggest grocery store in the country. We can grow a lot. But we have a second business that is called Click Commerce where we also own the delivery, the DAC store. We started this business just 7, 8 months ago. So it's a very young business. It's not profitable yet. I believe it's between 1 to 2 years is more or less when we think this -- the profitability of this business will come. But this is an important business to me because one variable that is these broken orders. First, the NPS is higher, 76, but the broken orders is very small. What generates more frequency, more happiness for the broken orders, meaning some of the items in the grocery store is missing. We can deliver a very high quality on this business. And I believe with 1 to 2 years more, this is going to be -- I strongly believe. I know the market sometimes is very excited and then sometimes it is very unexcited. I really believe we are going to make this business work financially in 1 to 2 years. So that's our true grocery business. And just to remember, we keep innovating. We started doing fintech offer. We just saw the PayU excellent hedge profitable presentation. We started on fintech because a demand of the market in the pandemic. During the pandemic, we have 300,000 restaurants, many of them was without money to keep operating. So we helped to deliver billions of dollars together with some bank partners, I think $3 billion or $4 billion to cash flow to restaurants anticipating money. This was critical to the economy of Brazil, to the restaurants' economy because hundreds of thousands of restaurants was open because we are getting cash flow faster. Now we transformed that in the business we call the restaurant bank, and we have a few thousand loans per month, where the restaurants anticipate money for us. It's a very small business yet, considering the size of iFood. But I want to tell that in the perspective to say that 1P was a very small business than I was here 2 years ago grocery -- 3 years ago. Grocery was a very small business 2 years ago. And I believe we are just starting offering. We are learning a lot from PayU. Thank you, PayU, for all the very good ideas because I believe this can be substantially bigger inside the iFood ecosystem. So we have also a payment business that is the customer is paying to us. We have a bank of restaurants, and we have a meal voucher. A meal voucher is basically a card just like a credit card that you use only to buy food, and also I believe there is a lot of growth on this business. That's the big message on this story. I know we are in times of being more conservative in many things, but we have a company that has amazing culture, people connected to really build the next biggest technology company of Latin America, innovating a lot. These videos are a success, and iFood delivering through the drones or robots or electric motorcycle, that is a thing that we are pushing a lot and connected to our purpose. I really believe we are just starting. In the next Capital Markets Day in 3 years, I don't know maybe before, but the next one, it's going to have -- keep having very good news on iFood. I put here in the end our proposed and our connection to deliver value to society. It's a very important thing to iFood. We call it deliver education, environmental inclusion. And our -- we really believe that the best companies in the world for the next 1 to 5, 10 years are going to be the company that really impacts positively the society. We want to be perceived as a global leader, not only a Brazil leader, but a global leader in this area. We are doing more or less 50 products in this area. I just want to highlight a few of them. We are pushing aggressively on electric motorcycle. Our goal is to have 100,000 electric motorcycle and to push the electricity on transportation in Brazil through the iFood strength. It is happening. We have -- we are helping many factories to build these motorcycles to distribute in Brazil, and we want to have 50% of our delivery just in 3 years on clean models using electricity or bikes. As a curiosity, this number was 0, 3 years ago when I came here. Today, it's 20% of clean deliveries, and it's going to be 50% in 2025 or before if the supply chain helps me because no one delivered electric motorcycle today. But we are doing well on the environmental. We are investing a lot on the packaging too. So we have the scale to push the society to say, I can buy 1 billion packaging at a cheaper price, and price is full is critical. Many people say, yes, people are going to be sustainable because it's nice. We offer people, can you pay $1 more to have a sustainable package? The answer is no. Our job is to use our size to make the market of sustainable packaging work and therefore, reduce the price and therefore, increase the number of sustainable packaging. We are pushing that very strong. If you want to learn more, please ask more. Inclusion, we deliver 6 tonnes -- 6,000 tonnes of food to people in need. We are one of the biggest companies giving money to people on food security. In education, we already impact 1 million people in education, especially drivers where we are doing a strong push to increase education of drivers. So I hope I will be recognized as one of the most aggressive companies to deliver social impact. And that's, I think, is something that the tech company has to build over the next few years. Just to finish, someone saying here, your time is over, stop talking. Just because Brazil won, you can't monopolize here. I think I can't because well, okay, I'll stop talking. I just want to finish saying we have 43 million active customers, more or less $10 billion of GMV. This number grew a lot over the next 2 years. It's a common question to ask to me. So after pandemic, is it going down? No, we're still growing, growing sustainably, and we are happy with our growth today. Our cost per order is reducing a lot because with our scale and our focus in increasing profitability, our numbers are really improving in terms of profitability. And we are, since last month, a breakeven consolidated company, not only for deliveries breakeven, but all the investments I show makes the whole company breakeven. I'm very confident we are going to keep showing good results over the next few years. And I look forward to your difficult and nice questions to win the shirts. Pleasure to be here. That's it. Thank you very much. Bye-bye. Bye-bye. Larry is here. Remember, difficult questions with tables. Larry? Well, the easy ones about work up to me.

Welcome to the Brazilian shirt sweepstakes. All right. Who's got the question? There we go. Right in the middle. Does that work? If you wouldn't mind standing up when you're asking the question, so we can see your beautiful face.

Great. Thanks for the opportunity. It's Warwick Bam from Avior Capital. Three for me, all on a similar topic. You spoke about the positive relationship between customers' tenure on the platform and order frequency and order size. Are you finding that the time to achieve high adoption rates is declining? Question one. And then what percentage of your growth comes from existing customers versus acquiring new customers? And then lastly, in assessing your addressable market, can you give us a sense of whether there's any demographic bias to your user base, such as single individuals with full-time jobs?

It needs to be higher. Can you make higher the microphone? Or can you put closer to your?

I can. Can you hear that better?

Yes. So Brazilian needs you to talk louder otherwise.

No problem. Should I start at the top? Or did you hear the first few?

No. Why don't you go the first one?

It's on you. They're all for you.

They're all for me. I hope it's for Larry because I'm not understanding. The first one. No, no.

I'll repeat very quickly. So the first one is really about the relationship between -- the positive relationship between customer tenure on the platform. So the longer the customer has been on the platform, the higher the order frequency and order size as to whether that's declining over time. Otherwise, in other words, the newer customers coming on is the adoption rate. Is that accelerating? And then can you give us a sense of the mix of your growth between existing customers from previous cohorts from earlier years versus, I guess, customers you're acquiring? Your rate of increase is quite fast.

So wait, before next. So I have this chart. It's a super nice chart showing exactly what I showed you. The customer entered this year, 5 orders per year. Last year, 10 orders per year; 2 years before, 15, 18, 20. It goes up to 70. So every year that goes by, customers are ordering more frequent. The average order value is also increasing substantially for many reasons, including we are explaining this selection. You started doing food delivery only. Now we have, for example, grocery and people do much bigger orders in grocery, and also bigger restaurants or more fancy restaurants where we have also bigger orders. So I see it as a trend to keep improving. And just you asked about the more or less half of the user base joined during the last, if not 2, 3 years, probably 2 years, half of user base in the last 2 years. So because half of the user base are just ordering in average, let's say a number, 12, between 10 and 15, there is a lot of upside until this user base mature to at least 30 or even 60 as I just said. So this trend today -- I think a big thing to talk to you about the model is over the last 3, 4, 5 years, we are talking about adding tens of millions of new customers per year. Now the thing is I have a very big user base, and the user base is maturing, and only this time going by and increasing the frequency of the user buying, the whole numbers of the platform keeps improving.

And then last question. Just do you have a demographic bias to your user base? In other words, do you find that, I guess, single individuals with full-time jobs, is there any insight you can give us on the demographic bias of your user base? So younger individuals, single individuals with full-time jobs.

So actually, I'm not going to answer that directly, but one of the things that we've learned over the years. Fabricio mentioned that the model itself is down in 1,600 cities. I distinctly remember a conversation we had when you were at 300 cities. And we wondered how big you could get. Like this is why we're often dubious of TAM, right? Because the business looks very different. The things that you can do when you cover 5x the cities. And we wondered the exact same thing. Was this an offering that was only relevant in big cities, wealthy populations, Friday, Saturday nights? And as the business grows, we've seen a lot of our initial concerns about that fall away.

Let me connect that with variable. I think it's more important. I don't think the question is young, couple, et cetera. Everyone is using iFood. 44 million -- 43 million was in the slide in a year, it's a lot of people. Remember, average order is for 2 people. So we are talking like 80 million, 90 million people eating on iFood. Young people, 20 years, kids use our food a lot, a lot. They ask their parents or they are using their own phones. And older people. Everyone is using iFood. Association to you, if you go to Brazil, just walking the streets, you remember the iFood brand, 5x between -- you leave any place and go to other places close by, more than 5x, 10x, 15x. Because you just walk in a car and all the motorcycles are iFood delivering orders. So the variable that to me is important. It's another one that is the economic moments of the country. Today, why -- when we do researches, why don't you order more iFood? Almost none say to go to a competitor because they offer a better service, because our quality is substantially higher than the other 2 competitors. But the reason is because they can't afford to buy more frequently. So I can buy once or twice a month just because it's a special dates. If I have more money, I buy 20 or 30 or 40 times per month. So my opinion is that with -- when the economy goes better and you have, again, much more middle class or poor people getting to middle class, the number goes up because the biggest restriction today is I have free money to give myself the pleasure of ordering at home. So I have many all areas where I don't have the demand is in a more poor population, and I think it's a function of the economy of the whole country.

All right. Chris, yes? You can go over there as we get it over. Silvia?

I took over 10 minutes to answer this question. Next one will be in 20 second because...

A question for Fabricio. I'm sorry, but it's about profitability, but I'm going to ask in a different way. Just wondering, to what extent this is coming, thanks to marketing as a percentage of revenue becoming more efficient, thanks to your strong brand in Brazil? And what do you think this means for the competitive landscape? Can more than 1 players operate profitably?

If they are more they won't play, it can be profitable? In the end, I don't know. We have to ask them. What I can tell you is that if you compare ourselves in terms of NPS for customers, for drivers, for restaurants, we are substantially higher than the other -- the other players play. Substantially higher. So buying iFood is a substantially better experience than buying the rest. Today, we have a market share of around 25%, if you count all orders of the restaurants. So not only the orders that you do to app, but through WhatsApp, through phone, or you go there and take the orders. The #2 restaurants using the same -- the #2 competitor has around more or less 1.5%. So the customers are saying, we completely prefer iFood as a full experience to buy food delivery in Brazil. And I think we also -- you talked beginning about the marketing. We have a very strong brand today. And people also believe iFood can be a technology company that has a positive impact, what I think help us to have this positive relation, with all the customers.

All right. Quickly, Chris, and then Will. We got 1 minute, 15 seconds. 12 seconds. 11.

I'm not sure if that will be enough though. Just a quick one on consolidation. I mean, iFood, obviously super, super strong in Brazil. Is there any appetite to grow outside of that? I mean, I know there is another delivery here, for example, has a huge LatAm business, I mean sort of consolidating that continent. Could that be something that, at least in theory is of interest or?

Yes. I think for us, and you heard me mentioned earlier in our presentation, is fundamentally a local business. And even building on the last question, that iFood itself has grown from 300 to 1,600 cities. Can -- on some dimensions, make it more national, like new marketing channels open up, you can do national television in a way that a local neighborhood or city provider can't? It's -- the synergies in this business, the network effects start local, maybe national, they're the weakest on a more global scale versus some other businesses we look at.

And just to complement, in just like, for example, Mercado Libre, that I think it's an interesting benchmark. The idea of expanding to other verticals around, for example, fintech or grocery, I think there is a lot of upside on this expanding inside Brazil with this customer base. I think that's my priority today.

All right. Big question. Who won the jersey sweepstakes?

What's her name?

Silvia. Hey, come on down.

Silvia. What's the result of yesterday match? Let's check.

I'm Italian, so I'm not watching it that much.

Oh, my God. Silvia. You have a shirt here.

You have the shirt. But it's Warwick's shirt now, I think.

Because of our diversity projects you say women take care about the Brazilian match. You won the Brazilian shirt. You are going to see us in the final. Congratulations, Silvia. I'm going to give her the shirt.

All right. Thank you very much, guys. And that brings to conclusion the food session. But that food session brings on yet another food session, and that is what we call an Irish lunch. So let me give you -- it's also in English.

If you ask, you can ask iFood delivery. We will take the food to your table. So you can -- I'm going to use it to deliver. So you can ask iFood delivery here, too.

Brilliant. So I'm going to ask you, as you can see, we are -- the screen behind me is opening up, and I'm going to ask you to join us. Oh, hello. Look at that, look at that surprise. So we have tables there with markings. We'll ask you to go pick up your lunch, bring it to a table. We also have a number of activations around. You can go out and see an OLX Autos car inspection. You can go see the iFood booth. Lots to do. And then obviously -- well, not obviously, I've been reminded once again to tell you to get your NFTs out front. Don't be afraid. That could make you an instant billionaire if you drive some demand. So please, we're going to gain our 10 minutes back. So please be back here at 2:30. Enjoy your lunch, and we will see you at lunch. [Break]

Hello. Hello, hello. Welcome back from lunch. We are on the final stretch, 3 more sessions and then some Q&A. So I hope you had a lovely lunch, and I hope you're well rested. I'm going to keep an eye on you though. No sleeping. No food induced coma because more food for thought is sustainability with Prajna. Thank you very much.

Good afternoon. It's after lunch and after Fabricio, hard act to follow. Here we are. So over the next few minutes, I'll be sharing a snapshot of our sustainability agenda here at Naspers and Prosus. We'll first start with understanding how we articulate our shared value system as investors and how we embed ESG criteria in our capital allocation decisions. We will then zoom in on how we are driving climate action across this very diverse range of businesses that you saw before and that you're coming up later. And then we will go into our commitments to building inclusive communities both inside and outside our organization. But let's start with first framing the shared reality of the world around us. We're living in an increasingly turbulent and unpredictable world where technology is transforming the way we live and interact with each other very rapidly. And in this post-COVID reality with geopolitical instability already contributing to deeply stressed resources, on the 15th of November, the 8 billionth human was born. We have no choice but to transition to a more sustainable way of being and doing business to meet the needs of not just this generation, but the generations to come. And critically, every actor in society has to be part of this transition. We believe that we can harness the power of technology to drive this transition, which is why at Prosus, being a force for good, underpins our sustainability approach. But what does it mean to translate being a force for good into practical implementation? It first requires us to very responsibly manage the impact of our business and our operations in the world around us. We start with setting the foundation to mitigate potential harm consequent to operations. We then graduate to doing good and giving back to some of the communities where we are operating in, and ultimately, accelerating the transition to greener, more sustainable societies by leveraging our core strength. And we are building from a position of strength. I'm reinforcing Bob's message from before. We invest in local entrepreneurs who are solving for local needs. This underpins local economic growth and progress in these communities, which in the long run is the most sustainable way of enabling economic parity and equitable access to resources and opportunities in a society. And from an environmental perspective, we are not a high emitting sector. And our capital allocation strategy has enabled us to develop a portfolio of businesses that are asset light, low carbon and are able to further catalyze the transition to wider systemic responsible consumption for every user of those platforms. Allow me to illustrate. You saw before, our classifieds business, OLX. Romain shared on all the emissions saved on the equivalent of energy that is saved through the trade of secondhand goods that would possibly otherwise end up in landfill. Our payments and fintech platforms enable digital access to financial services with a lower carbon footprint compared to traditional brick-and-mortar-based delivery of the same services. And our vast portfolio of ad tech platforms are enabling an increasingly diverse user base to access online learning anywhere, anytime, without the carbon footprint of a physical learning institution. There are no books to be printed, no buildings to be heated, and no fossil fuel is generated in commuting to and fro. Similarly, we've all made online purchases. E-tail allows for the sale and purchase of products without the accompanying physical footprint. While our best-in-class food delivery models are creating livelihood opportunities for people all over the globe. We do recognize that there are some pockets of carbon intense activities across our businesses and operations such as in the delivery of food and products. And we're working very hard to find solutions to drive down these emissions. Fabricio shared earlier about the electric vehicles, but every e-tail and food delivery business in our portfolio is at some stage of piloting electric vehicles in their delivery fleet. To learn more about these, I encourage you to visit our sustainability booth at the entrance during the next break. But let me take a step back. Across the very vast range of ESG issues that are presented to any business like us, how do we decide where to focus and where to allocate resources? Well, we started with conducting a materiality analysis to understand what is important to our stakeholders like ourselves, where they believe we can have an impact or we can be impacted by from an ESG lens. And as you can see, the outcomes of our materiality mapping are extremely intuitive and reflective of the common denominators across the diversity of business models in our portfolio coming to digital platforms. Not surprisingly, we have data privacy, cybersecurity, cyber resilience, innovation, digital inclusion and AI right up there. I was personally very pleased to see climate action despite a low carbon footprint. And this is only demonstrative of the fact of how highly indexed climate action is in the world around us and the expectations for private sector to play their part. How we cascade our approach and our engagement with our portfolio companies across these material issues is we apply a differentiated approach based on our interest, which is an indicator of our influence, on our ability to influence. Where we have a controlling interest, we cascade our group principles, our group approach, engage deeply with the business to integrate them on to our sustainability agenda and pathway. And where we have a minority share, we demonstrate best practice and encourage the best we can. I would really like to take this opportunity to call out what is very unique to us is a sustainability accelerators network. It's a unique forum that we offer to all process companies regardless of control and ownership levels, where sustainability leaders and experts across the group come together on a quarterly basis to share updates, exchange best practices, insights and knowledge. And this forum has actually seen a few offshoots of smaller working groups on plastics and waste, for example, in packaging and waste and electric vehicles. But now I'm going to dive deeper into one of these material topics that we saw before, responsible investing. It was also a topic that I was asked about at lunch a few times. As you have seen before me, we have a very clear focus on sectors and businesses where we proactively seek out opportunities to invest. Similarly, we also have very clearly defined for ourselves activities that we do not want to have an exposure to. These are tobacco, weapons, pornography, cannabis, amongst others. So our investment teams while steering away from these opportunities in these activities and sectors, they also conducted due diligence on material areas like data privacy, cybersecurity during the very early stages of investment. Our second pillar of our responsible investment thesis is how deeply we engage to onboard all of our subsidiary companies on to our group sustainability strategy agenda and help them with their performance. Our third pillar covers 2 elements. One is to quantify the net positive impact of our business segments, such as the classifieds business. You must have seen, it's on our website, it's the OLX Impact report, which is an annual report that we released on emissions avoided from their business. While the second element is to uncover and invest in new sectors and businesses that are sustainability native and solve for environmental and social challenges. This is led by our ventures teams. And in the video you saw before when I just walked in, I love that video. There was one of the ventures new investments was featured Aruna. That is an integrated e-commerce platform that is connecting local fishermen and fishermen in Indonesia to global buyers to help them get fair pricing. Now I'm going to go a little bit deeper into our climate program, environmental program here, for every company that is onboarded into our group. And last year, we started this journey with Stack now. We cascaded 3-step climate strategy. The first step is to start mapping the environmental impact and do carbon accounting across the extended value chain for the purpose of disclosures in the long run. Within the first 24 months of onboarding, the company is required to calculate and disclose its Scope 1 and Scope 2 data, which is the use of fossil fuel -- solid fuels in their operations and the energy mix, whether they're procuring gray energy or green energy. Through our centralized data management tool, we then graduate them into the extended footprint, which is Scope 3. Data from this tool, our centralized carbon data management tool, is aggregated into a group level disclosure that we then seek assurance on annually, and you would have seen that in our integrated report. The next step is to help each business. As you can imagine, the profile -- carbon profile of a food delivery business will look very different to a payments and fintech and EdTech and e-tail business. So the next step is to help them define their decarbonization pathway and set long-term multiyear targets guided by global best practice and science-based frameworks. And then once they've set them all to your targets, finally, the most important is to identify scalable technologies, partnerships and strategies to achieve these targets in the long run. This has actually been our journey as well at Naspers and Prosus at a corporate level. Over the past 8 months, we've been working on defining a climate action plan that resonates with our practical reality and our group structure. Our Naspers and Prosus targets have been submitted to the science-based target initiative that you may know is the leading independent verification body for corporate targets. And these have 3 material elements. The first is a reduction of our Scope 1 and 2 emissions by year 2025. The second is a core very material element of our entire carbon footprint at Naspers and Prosus corporate level, which is business travel. From a technical perspective, it's Category 3, Category 6 in Scope 3. And this is a voluntary target. We've set a 30% reduction. But the crux of our science-based target and our net zero pathway is a portfolio coverage target metric, where we commit to encouraging at least 50% of our portfolio of businesses, majority of our businesses to have defined their own targets by 2030. The qualifier for this is invested capital rather than share of revenues. Using invested capital as the qualifying metric is reflective of our reality and does not skew the target to be influenced by Tencent who earlier in March this year already announced their science-based target initiative, their commitment to it. And we could very easily let go of our responsibility simply by leaning on them if we took the share of revenues as a qualifying metric. Financial year 2020 is the most recent year not affected by the pandemic and therefore, has been set as a base here for this target. What I'd really like to highlight is the coming messaging is on the fact that most of our businesses are located in the Global South. It's an important nuance for us to consider when defining our climate strategy and that of our portfolio of companies. Countries in the Global North have contributed overwhelmingly to the current state of global warming as it stands today. The U.S. is responsible for 25% of historical carbon emissions. EU is at 22%, while India is at 3%, and South Africa is 1.3%. In fact, as it stands today, currently, there are 3 billion people overwhelmingly represented in the Global South, who have the same annual per capita emissions as an average American refrigerator. So while the expected trajectory for all companies to be aligned to the same level of reductions to keeping global warming limited to 1.5 degrees by 2050, as you may have all heard from the Paris alignment -- Paris Accord, there is going -- each business will have to define their own pathway, and it has to be just and fair, a theme that we saw prioritized at COP27 recently. Crucially, most of our businesses are also operating in those very vulnerable communities that are most vulnerable to the impacts of climate change. These are our employees, our customers and our larger ecosystem, which is why driving the climate change agenda within our portfolio remains such a priority for us. However, as each business defines their pathway, it has to be just and fair. And what is super important for us to see is the country-level context of the business that we are -- where the business is operating. We see that most of our -- the countries have a very, very differentiated approach to their carbon targets and pathways. While South Africa has a 2050 target, India has a 2070 target. There will be a much bigger difference in the ability of a company that is operating out of South Africa to reach and achieve their targets than the same company, a similar company in South Africa. These companies are going to be materially influenced also by the enabling policy, the energy mix, the opportunity for them to actually transition and decarbonize and incentives provided by their governments. For example, a food delivery business in Germany is going to find it far easier to decarbonize their delivery fleet rather than a food delivery business in Brazil or a food delivery business in South Africa and in India. They will have a lower cost of capital. They will be able to leverage off the infrastructure in the country and also will be able to have the opportunity to align themselves to the country level maturity of decarbonization. So I'm going to now move on to the -- to how we are creating inclusive and diverse learning organizations within our own company. And though we are a very varied group of companies, there are some things that are consistent for our people wherever we operate. We want to build a workforce that is reflective of our diversity of our customers and our user base around the world. We also know that diversity in our teams and our thinking gives us a competitive advantage, which is why we proactively embed actions right from how we recruit and hire talent to employee development, rewards and career progression to remove bias and discrimination. And we work very hard to build a culture where everyone feels welcome and encouraged to contribute. Here, I'd like to highlight that the diversity and inclusion targets contributes to 16.7% of the short-term incentives linked to our CEO and CFO remuneration and that is cascaded through the organization. Now how are we contributing to building inclusive communities outside of our organization. In line with our purpose to improve the everyday life of billions of people through technology, community investment remains a very natural focus for the group. Our businesses implement corporate responsibility programs, social initiatives that meet the specific needs of the local communities where they operate. So it will look very different from what iFood is doing to what eMAG is doing and what Swiggy would be doing in India. This enables them to extend their strengths for positive local impact. What we also encourage our companies to do is to align their design and delivery of their social impact programs to what they do commercially and their positive strength. Let me give you an example that we saw the Brazil example Fabricio spoke so passionately about. And the CCA program, the Prosus social impact challenge for accessibility in India that we've been funding for quite some years, that identifies and supports young Indian entrepreneurs innovating with -- for assistive technologies to help Indians with disability. This was another question that I was asked during lunch. So sustainability governance, how do we -- what is the oversight and the performance management for sustainability? Accountability for sustainability performance cascades right through the organization, with oversight from the Board level and regular reporting to Board committees. KPIs are set at CEO and CFO level and cascaded through to the CEOs of each of the segments. And the total contribution of ESG-linked targets is 1/3 of CEO and CFO short-term incentives. And finally, we welcome the codification of ESG performance assessment by third-party agencies. This really helps with addressing market concerns on greenwashing or self-declared ESG front runners. We use these sources to also benchmark our own sustainability performance, our own path and progress and for feedback on where we can further improve on our performance and our disclosures. Thank you for your attention and engagement. I'll include (sic) [ conclude ] by highlighting that the opportunity to harness the power of technology to drive green growth remains vast. And our businesses are committed to supporting their own transition and the transition in the communities around them for a more sustainable future for us all. Thank you. And I have the absolute pleasure of introducing Ervin Tu, who is our CIO, who's going to talk to you about fun stuff like capital allocation.

Thank you, Prajna, for that important color on our sustainability strategy. Very exciting stuff. I'm Ervin Tu. I am the Group CIO of Process, and I had the privilege of joining this amazing team a little over a year ago. And my topic today is capital allocation and a few other things. Now before I start, I have to warn you, I have no fancy slickly produced videos. I have no free shirts and clearly not the personality of that one Fabricio, he's sitting over here, nor do I have boom, boom, boom pow, which I think should be the real hashtag from the afternoon. But I have a few new things to show you, which I think will pique your interest. So stay with me and let's hope we can still have some fun together. All right. Capital allocation. We are often asked by shareholders to articulate our approach to capital allocation. The approach is very simple, and it's expressed in a fraction: maximization of NAV per share. On the left, you see the simple expression; on the right, you see the elements. You entrust us with your capital. We want to maximize the return you enjoy on that capital by investing, building and optimizing our portfolio of growth companies and by managing the share count when appropriate. We place great focus on both the numerator and the denominator and I'll go into depth in the next few minutes to describe how we manage each side of the equation and balance the elements. So let's get into a little bit more depth here. This is the right-hand side of the previous slide. On new investments, we manage our portfolio actively across many geographies and segments. We draw on a wealth of experience across the group and apply them to all of the situations in markets in which we invest. New investments undergo a rigorous process of identification, evaluation, are only approved once our hurdle rates are met. These opportunities are vetted by senior members of our team and ultimately our Investment Committee chaired by Bob, with ultimate approval resting with our Board for larger investments. Second, the existing portfolio. We are not passive money. We actively engage with our companies and monitor them closely. And I can assure you, I've been at different shops. The metrics we use to review and assess the health of our businesses go far beyond a simple evaluation of a P&L and cash flow statement. In our performance review sessions, we discuss how best to optimize any given investment. What operating advice can we provide, for example from other investments across our portfolio that involve similar models, or from the collective operating experience of our many executives who have actually run businesses. We have a number of operators on our senior team. Is more capital needed, and if so in what form? Third, reevaluate and reshape. We actively consider whether we should shape the investment in a different way. When I say shape, I mean list it, sell it, merge it and so on. Holding a position is an action. Do we need to do something different? Lastly, with respect to the denominator, and I'll get into more depth on the denominator in a second. We make our decision based on return potential relative to other opportunities to generate NAV. How do we balance the two sides? We get this question often, in addition to capital allocation generally. The ingredients are the following: on the left of the slide, what return can we generate and with what risk envelope? Versus on the right, what return can we generate given market conditions and the level of discount. Our goal is to drive the highest risk-adjusted return with our capital, full stop. We believe -- you've heard why we believe from our senior team previously -- we are good at creating NAV for you. And until the recent market downturn, we had a track record of producing 20%-plus IRRs. In the spirit of further transparency, I will show you in a few minutes how we've done more recently, so you see what we see. The beauty of managing both the numerator and the denominator is we can provide significant leverage to asset-level IRRs by reducing shares outstanding over time. Now at the moment, given the level of uncertainty risk we see in the market, the fact that private valuations haven't yet corrected -- you saw that earlier in Bob's presentation -- and the level of discount we still see to our underlying NAV, we are opting to keep the bar high on investing and are shifting capital from our Tencent-funded buyback to manage our share count. Now let's get deeper into our performance building NAV. This is new. First, before I get to the new stuff, let's -- I'll take a breath and look at a very messy picture. Eoin calls this the messy slide, and he's right, because it's been a rough year. What this picture depicts is a number of sectors of tech over the course of the last year. Some of them are segments of ours, some of them are not. But -- and you see the simpler more visible version of the table. The thing that's clear in all of this mess is downward trajectory, downward trajectory, downward trajectory. Now you know, because you know us well, that we are not dedicated public market investors, but the valuation downdraft has hurt us everywhere, not just in our listed portfolio. So here's a new slide. And yes, you will get these slides at the end of the session, so you don't have to frantically scribble. This is a picture of our performance as of September 30, with both our wins and losses. Capital invested, cash on a gross basis, cash inflows, valuation, IRR and then MOIC. We know you, our shareholders, have been asking for greater transparency. So we've set ourselves a goal of increasing the transparency of our performance so that you could see what we see. We can then engage in a better and more specific dialogue about our opportunities and risks with data. Note that the valuations here use analyst consensus valuations for our private positions, where available, or last transaction round valuation, and we supplemented for some of the smaller assets with our internal valuations. The summary at the bottom is sobering -- much of it is sobering, but the summary at the bottom is also sobering, and we aren't satisfied. Since 2008, and not including Tencent returns, we've invested $32 billion of gross capital on the left, returned over $11 billion and produced an 8% IRR, 1.3x MOIC. That compares, you know, to 20% plus IRRs we've published in recent years. We've been hit hard by the public market downturn and significant multiple contraction for high-growth unprofitable businesses. Thus, the great focus you've heard from Bob, from others who have been up here, #profitability, and in a moment, you'll hear further from Basil on accelerating the profitability of our portfolio. We cannot control multiples, no one can, but we can certainly influence the earnings performance of our businesses. That's where we're focusing. This slide shows that we've also been affected in terms of our exit performance by the recent environment. Now 3 prominent exits at the top, the other reflects a number of different situations, including all failed and disposed businesses. So this is full open kimono, everything is in there. There's no exclusion. Exits have been affected by the recent environment, particularly Avito, which I wanted to share more about because it was our most recent and painful exit with respect to a business that was a jewel of a business. We actually produced a modest return on Avito, but had we not been confronted with certain market circumstances, the outcome would have been significantly better. At a reasonable valuation -- we show here our potential return at our last third-party valuation from March this year -- our outcome would have been materially higher at 2.9x MOIC -- I'm on the far right -- and would have resulted in an overall adjusted average of 2.2. Now this has all been about e-commerce. I'd be remiss if I didn't talk about what we've also produced for you in terms of Tencent. Our gains from our position in Tencent have produced $37.5 billion of cash inflows and the MOIC is, incredibly, over 3,500x. Now this is our portfolio again. You can see top right, $31 billion. That was a number from two slides ago. And the segment contribution is also the same numbers from two slides ago. We have actually over 100 positions in our portfolio, but our largest ones, the ones represented here, are where we, as a management team, and our Board spend most of our time. Overall, notwithstanding the valuation hits our portfolio has taken, we feel confident about our larger positions. And you've heard from Bob, Larry, Romain, Laurent as to why we have that confidence. When we look at the scorecards of our businesses, and we do so frequently, we see an incredible discrepancy between their health and performance relative to the market's valuation. We continue to be optimistic that these businesses will generate meaningful returns for you, for us and for you. And we're working hard to deliver 20% plus returns again. Now here's one last picture of our performance, which is a relative view as opposed to a stand-alone view of our returns. What's on the chart. The bars depict our Ecommerce SARs scheme, an LTI vehicle for our management, and it reflects the valuation of our Ecommerce portfolio over a 1-, 2- and 3-year period. Note that these valuations are conducted by a third-party firm and are generally close to analyst consensus valuation. The peers, reflected by that green vertical line in each case, are a set of over 20 Internet companies. You can see the full list in our annual remuneration report, and those companies sit across a range of Internet sectors. Our Ecommerce portfolio has meaningfully outperformed the median and has placed near the front of the pack, even more so if you consider Avito at a more normalized valuation, that's the dotted box section. Here again, we used the $7 billion number, which was our last third-party valuation from earlier this year. Let me emphasize again, we are not satisfied, but we hope you will consider as we do both our absolute and relative performance at a moment like this one. So those are our returns. Let's move on to share count. Some of these pictures you've probably seen from us before at results, but I'm going to give you a little bit more color and emphasize a few other things. So the open-ended buyback program, you all know, we've been actively enhancing NAV per share by reducing the share count in this meaningful way. Here, you can see the results associated with $6 billion of buyback to date at the top, which results in 3% NAV per share accretion. On an annualized basis, that results in just shy of 7%, 6.9% accretion. As Bob has said before, we are absolutely committed to this program, and we will keep going as long as our discount remains elevated. I'll show you how the benefits will cumulatively increase. So here's the per share accretion year-by-year, the 7% from the previous line to 6.9%, 15% a year to 24% in year 3. The bigger the discount and the larger the program, the bigger the benefit for you. Now the other feature we've talked about, but worth saying again, the program will give our asset returns, those returns that I talked about a few slides ago, a kicker as conditions eventually improve, and we start to grow NAV again. Without a buyback, the group IRR, of course, simply equates to the growth of the underlying assets, but the program will amplify these returns. Let's just take the midpoint 20%, the gray bar, that just assumes our asset side produces a 20% return. With the buyback program, the returns that you enjoy would be 29%, significant magnification. Now on the right-hand side, let's talk about Tencent. I reiterate Bob's comments that 100% of the value creates from arbitraging the value of our assets against our market cap. It has nothing to do with Tencent's current valuation, as we sell and buy, the way the program is designed, with almost no delay. And a key component of the program then is that we increase our exposure to Tencent, you increase your exposure to Tencent per share. Here, we show the annualized number, which is over 3%. That means we are more geared to a recovery in Tencent's share price. And given the scale of the program, we will remain a very large shareholder for a long time. You've heard Bob's strong conviction on Tencent earlier in the day, it's a conviction I also share. So to summarize, we are committed to this open-ended buyback program because it creates significant NAV per share accretion for you, it enhances our per share exposure to Tencent and it provides additional important leverage to our asset-level returns. What's next? This is a picture you've seen before, but let me emphasize it again. We cannot control multiples, but we can influence earnings, and we are utterly focused on accelerating e-commerce profitability for that reason. We are committed to our open-ended buyback program, and we expect a strong recovery from China and Tencent. Lastly, on simplification, we are committed to finding a solution to the complexity of our program -- complexity of our group, excuse me. And our efforts at greater transparency today were part of this spirit, to provide you a clearer and simpler view of our performance. Lastly, let me comment on the bottom. It's a graph you've seen from us before as well. But we -- while we think we're great builders, we acknowledge you expect more from us. So you should expect to see more of this cycle. We invest, we scale, we crystallize, we repeat and where possible, we return. Let me close on this before the final summary, which is crystallization. Everyone asks us about crystallization as well and I want to offer some more comments on it because we know you care deeply about it, and we've recommitted ourselves to doing it in a way that shareholders tangibly benefit. It's core to our strategy. And people ask us, what are the examples? Well, we've demonstrated that over time. You can see on the left-hand side with respect to companies we've listed in some form, 6 examples. And on the right, 8 examples of companies that we've sold or positions that we've sold in some way. We understand there's more to do. I'm not here to offer you any announcements today, but trust that we have teams now working on multiple other situations, and markets and conditions willing, this list will grow in the next 12 to 18 months. What will we do with any proceeds we generate? Facts and circumstances of course, matter, but when possible, we will look to return some of that value to shareholders while also keeping some of it to fund further growth. So let me close. We are laser focused on growing NAV per share over time. We will achieve this by actively managing the numerator and denominator of the NAV equation consistently. Current market conditions have affected our strong historic returns, but we have ambition to return to 20% plus, and we will be more transparent about how and why. We are firmly committed to our open-ended share buyback program while it continues to create NAV per share on a stand-alone basis, and because it magnifies returns on our NAV. We are building a repeatable process of investing towards crystallization and return that will define the next generation of value creation at a group level. And lastly, and you'll hear more about this from Basil, who's coming up next, we sit in a position of significant financial flexibility, which affords the group optionality to act quickly if opportunity presents itself, but the bar will remain very high for external investment at the moment. I'll close there, and let me invite our Group CFO, Basil, to join us.

So when you sit on the money, you literally sit on the money. As the CFO, at a time like this I have the benefit of requesting a chair. Just give us a second. We have -- I'm not getting all my slides up here. James? There we go. Okay. Now I can see the slides, and hopefully you can see them behind me. Yes. Great. So welcome, everyone. It's great to see so many of you in person, and thank you to the many who have joined us via the webcast. So they're joining us via these two cameras in front here. I've enjoyed catching up with you in person. And as I've told you, when we did catch up, I find the in-person connection invaluable. So thank you for making the trip out. Before I get into the meat of my presentation, I just want to take a moment to recognize our incredible IR team, our incredible Comms team and our Events team. They've really, really worked hard to put on this show for you. And it took my breath away. I hope it's done the same for you. And then also to all our speakers who have put significant effort and thought into their presentations. So you've heard from Bob, our segments and businesses, and Prajna and Ervin about how we plan to grow the group in a more profitable and sustainable way. This lays the foundation for a repeatable process of value crystallization and return for shareholders. And it's my turn now to share my own perspective. How we will drive profitable growth. How we will accelerate the path to consolidated e-commerce profitability and how we will supplement this with additional actions to create and unlock significant value for you, our shareholders. I see four key drivers in this journey. First, our rock solid balance sheet and significant liquidity. Second, our growing and profitable core, which underpins our conviction in the growth extensions you heard about today. Third, we're scaling our businesses, growing margins, attacking costs with a determination to deliver consolidated e-commerce profitability. Doing so will enhance our ability to crystallize value for our shareholders. And finally, we're growing our net asset value per share, increasing all future returns through our open-ended share repurchase program. These drivers give me the confidence that we will have a more profitable and valuable business in the years to come. So in the last 3 years, we've spoken -- we've achieved a lot. They've been foundational to the journey ahead. We faced several challenges along the way, but we've took actions to address them. A lot has been done since, and I'm going to talk about that in the slide here. We outgrew our peers, achieved scale and delivered profitable core. Our core businesses created new opportunities. These extensions are growing fast. And in the current climate, our investment focuses on these extensions. We have doubled Prosus's size in Europe, and Nasper is now rightsized for growth in South Africa. And reflecting on our dialogue with you, we have taken significant steps to improve our disclosure and importantly, in taking this differential action with our open-ended share repurchase program, which is creating significant value for our shareholders. And we've leveraged our increased scale to significantly grow our bond program. We were deliberate in the timing and the size of the capital raises. We were very focused on locking in attractive interest rates at a point when we believe they would be at historical lows, and anticipating the rapid rise from these lows. We raised $10 billion in 3 years. We extended the maturity of our debt profile. 85% of our debt is due after 5 years. We achieved this while significantly reducing the average cost of our debt, and this has been amplified by the proceeds from Avito and JD, and that's created a further significant boost. We are pleased with the Tencent distributions, and we are, of course, like many of you who are also shareholders of Tencent, looking forward to receiving the Meituan shares in March. Tencent is a great investment but it's also been very good for our balance sheet. And here, you see the numbers that underpin the messages I just gave you. We have gross cash of $16.4 billion, and we're in a net cash position. Our average cost of debt is just 3.2%. With our focus now on profitability, we will grow the dividends to the holdco further and recoup the dividends we lose having sold Avito. Tencent is paying sizable dividends and supplementing these with valuable asset distributions. Our liquidity is an important advantage. We have the required financial flexibility to support our businesses so that they can realize their full potential. That strengthens the businesses at a time when other companies may be forced to pull back. And we've shown we can allocate capital and generate high returns. This has increased our net asset value significantly. We have created significant value by investing in our businesses, making smart acquisitions and reducing our share count through share repurchases. As Ervin just explained, we've actively managed both the numerator and the denominator, continually growing the net asset value per share. We remain committed to this process, which boosts equity returns for our shareholders. Our investments have delivered tremendous growth. You heard from my colleagues today on how they've driven growth and scale in their businesses. Our consolidated revenues are 3x what they were 3 years ago. We have diverse businesses which are resilient to the market shocks. These businesses continue to grow well despite the most challenging backdrop we've had in 40 years. And there's more runway for growth. And of course, for me, as the CFO, what is particularly pleasing is that this growth is scaling profits at the core, and I'm confident we will walk a similar path for our growth extensions. This is a trend that I expect to continue for many years to come. The group has outgrown its peers for a long time. This is a slide we've shown at each Capital Market Day. The macro context, of course, means growth will come down for everyone, including us. But the slide shows that in the first half of this year, we have drastically improved our growth outperformance versus our peers. This points to the resilience of our businesses and our markets. Today, you have heard from our business leaders that they are confident they can continue to grow and drive operating leverage to improve profitability, notwithstanding the current climate. And we've been through this cycle before. And you'll recall, after extensive investment in the core operations, we've now achieved scale and profitability. And these core businesses continue to grow at a very healthy pace, 20% in classifieds, 29% in iFood and 47% in our consolidated PayU business. And this growth, combined with cost action, will deliver margin expansion in the years to come. So Classifieds ex Avito is already delivering healthy margins, 27%, which Romain told you about earlier, but he also told you that those margins are going to expand. iFood's restaurant business has done a phenomenal job, first building a profitable 3P business and then identifying the 1P opportunity and bringing that to scale and profitability in just 3 years. And Fabricio has told you about his conviction to repeat the journey in groceries and quick commerce. Payments has been profitable at its core for a while and will return to profitability in the second half, driven by the initiatives you've heard from Laurent today. With each now profitable, we will see the benefit of further scale and further acceleration of profitability and margins. And with a strong core as the foundation of the segment's scaled growth extensions we'll continue to grow rapidly. This fast growth combined with cost discipline, but focused investment will accelerate the path to profitability for these businesses too. Growth, in our earlier stage businesses, is strong. And notable given the current market context, Autos has doubled its revenues. Our convenience revenues are now 9x, and our credit revenues 3.5x. As I mentioned earlier, this puts each business on a steady trajectory of continued growth. And with that scale will come profit improvement. Our investments will remain focused, prioritizing the best market opportunities. We'll drive further efficiencies. And as others may be pulling back in our markets, that will create an opportunity for a faster path to profitability. The strong balance sheet we spoke about earlier has enabled us to make this investment. But of course, we're conscious of the market context and how things are changing, and we are adapting by focusing the investment predominantly inward to our existing businesses, which have a proven track record. The investments benefit from synergies with the core operations. This increases our confidence to invest behind them. Fabricio showed how groceries is a natural extension for iFood. Laurent and Prashant have shown the same for PayU and Romain for Autos and OLX. Yes, in the first half, we increased investment to back this growth and scale our businesses, investing $483 million, but we also invested significantly less in M&A and new initiatives than any time in the recent past. The level of this inward investment has now peaked. It will come down in each subsequent half, and it will continue to grow as we optimize cost and investment further. We also have an exciting portfolio of minority investments in promising earlier-stage businesses and opportunities. The vast majority of these businesses are well funded. They have significant runway and, like us, are taking action to deliver profitability in a faster way. For example, Delivery Hero, that's our [ largest ] associate, and it's benefiting from the same dynamics as iFood. They are making great progress, and they're targeting free cash flow breakeven in the second half of next year. So now our businesses are operating at scale. We're entering this new phase of growth. It's about scaling our businesses further and as we continue to grow, driving profitability. As the businesses presented through the course of the day, we have multiple drivers to deliver good growth off our scaled base. And we are benefiting from operating leverage while also cutting costs, and that action is already underway. So as you think about the path from today to profitability in the aggregate in the first half of 2025, I want to emphasize that we expect the first half of 2023 to be the peak of the investment and a turning point for our consolidated e-commerce businesses. We will deliver consolidated e-commerce profitability in the first half of 2025, which is 2 years from now. You should expect improvements in profitability in each subsequent reporting period, and the improvements will gain momentum over time. We'll not take on new unrelated opportunities, and we're going to invest behind the momentum we have already with our market-leading positions. To accelerate our profitability and enhance our long-term profits, we're taking action to optimize our cost structure everywhere. First, we do not plan to add sizable new opportunities. Second, we'll optimize what we have, improving the unit economics, expanding the margins and ensuring that we're investing behind performing businesses. Third, we'll reduce costs at the center, but also at the segments. Fourth, we will exit underperforming businesses. So while a lot of execution is needed to deliver this, profitability is well in sight. And as -- and you will have seen this slide in each segment presentation. These are the areas that we're focusing on in delivering in the profitability ambition. We have plans and targets for each business. Each of the actions I've covered in the previous slide will deliver meaningful profit improvements in their own right. They're all important in the journey ahead to consolidated e-commerce profitability by the first half of 2025. We realize that the devil lies in the execution. But across the organization, as you've heard today, we are committed to this goal, and I have high conviction in our ability to deliver. All this means that there is significant margin expansion and with businesses continue to grow, significant profit and cash pools to be realized. This profit and cash flows will highlight the true value of our businesses and will amplify and accelerate our ability to crystallize and return value for our shareholders. And folks, these are the 3 pillars that will continue to drive outperforming returns versus our peers. The valuation growth and returns that our strategy will deliver will be amplified by our open-ended share repurchase program. And with our work to try and address the feedback on the cross holding while exploring further ideas for our structure, we will continue to deliver very strong returns ahead. So today, I am underlining that we will deliver long-term value creation for our shareholders. And finally, I will say that we're very excited about the journey ahead. From a position of financial strength, we will drive profitability and cash generation. We'll grow our net asset value per share, and we will realize the value we build for our shareholders in a repeatable manner. And in time, markets will settle. Opportunities will appear to deploy capital and repeat the process. It's going to require a lot of work from the people that have presented to you today and their teams. But know we're all committed and confident in our plans to deliver value for you. So with that, I'd like to thank you all for coming today. It's been great to see you again in person, and thank you to the hundreds of people who have joined on the webcast. Thank you for all your support and advice over the years. And it's helped us in the journey to this point, and it will help us in the journey ahead. It's well heard and much appreciated. So with that, I'd like to invite the rest of the team back on the stage for our Q&A session.

Yes. We're actually going to have everybody from the company participate in this Q&A. We're going to do musical chairs. So we've made it. Famous last words, don't you walk across me like that again. So we're going to do 30 minutes of Q&A. We'll take it from the webcast and in person. And that which we don't get to on the webcast, IR will certainly respond by e-mail. Okay. So Romain, why don't you take that? Okay, why don't you take that? And fire at will.

Authority pleased.

Do we have the catch, mics? You've changed your seat. I still see you, Will.

It's Will Packer from BNP Paribas Exane. Two questions, both for Ervin, please. Firstly, in terms of the Meituan stake, you've outlined the criteria for holding and selling investments. Is there a scenario in which you'd consider holding on to Meituan? And secondly, you're very committed to the buyback and accreting NAV per share. Is there a scenario in which you would use your cash resources rather than Tencent to fund that buyback? Could you just help us through the decision-making process on both of those?

Yes, maybe just start just to repeat the question because it may not been clear for everybody. I think the volume was a little low. So the first question was around Meituan, whether there was a -- if I heard it well, Will, if there's a scenario in which we would hold on to those shares rather than holding for sale as we did. Is that correct?

Yes. And how you think about that decision-making process?

And the second question was around whether we would use cash for a buyback instead of Tencent shares.

Correct.

All right. Excellent. Ervin, the floor is yours.

So on the first one, we don't have anything new to say with respect to our posture on Meituan. We indicated in that data we saw solid results that we are considering a held for sale for the moment. And what I'll tell you that in addition perhaps is just to say that we think it's a great business, right? The business has been performing, doing what we believe are the right things. And you can see that reflecting in this performance relative to others in the Internet -- China Internet landscape. So beyond saying that we don't have anything to say right now. We think it's a great business. It's, of course, an important dividend from Tencent, which we appreciate greatly. And we'll leave it there for now. So nothing new to say on that. On the second question, what's the scenario? I'm not going to get into hypotheticals on what scenario would cause us to change the program. All I can tell you is, as you've heard undoubtedly from us many times today in other settings, we are absolutely committed on continuing the program as it was designed and as it was announced in late June. And we haven't come to a moment where we've thought about modifying. So we're fully committed to the program as designed right now.

Okay. Lisa?

I have a couple of questions, please. Firstly, I think you said today that clearly the bar is very high for [ XO ] investments. But I'm just wondering what would make you consider looking at M&A again. Like is that external internal, what needs to happen for you to start acquiring companies again? Secondly, I think you talked a little about your focus on profitability. I think we heard it were profitability a number of times today. I'm just wondering how does that change potentially your management compensation structure? I think this year, you have an asset which is mainly linked to the discount. But as you think going forward, how are you thinking about potentially changing that to align more with your goal to reach profitability? And the third question, if I may, is you talked about these solutions to simplify the structure. I do -- clearly you're not going to make an announcement today, but what sort of time line are we talking about? Is it like 1 year, 5 years? Are they like 3, 4, 5 type options? Any color we think there would be helpful.

Yes. Thanks a lot for those questions. I'll just repeat them back because indeed, I realize these mics are not ideal, even though there are a lot of fun to throw around. So the first question was around we have a high bar for M&A and sort of know which circumstances and considerations would that be for us to start again? I'm actually happy to -- to have a go at that question, I should be able to say, Ervin, you should definitely add to that. The second question was around incentives, whether we have a change in the structure of incentives that now reemphasize in the short-term reduction of the discount. And is there a view on that. I cannot say too much about it, Lisa, because it's ultimately the remuneration committee that decides that, but I can shed a little bit of light on the conversations that we've had about that. And the third, you need to remind me briefly.

Structure. Simplifying the structure.

Yes. You said we're probably not going to be specific about what we're doing to simplify the structure, but can we give any indication of timing, I'll probably pass that to Basil and Ervin to talk about because that question is simply too difficult for me. No, I was actually realizing, as I was sitting here that this may be treat for you, but it's an even bigger treat for me because I see these people a lot, but I never have them sitting together with me, and I was looking at them with a great deal of pride and excitement. So this is a treat for me, an unexpected treat. On M&A, I think the question is obviously a fair one and the bar is high and the reason why the bar is high because the cost of capital has gone up, and we're also very committed to deliver an accelerated path to profitability. So those are things that up the bar, if you will. But there are things that tick all the boxes for us, right. It needs to be strategically relevant, deliver an excellent return and it needs to be something with -- and I'm actually echoing what Ervin just said, right? It needs to deliver great returns strategically relevant and have acceptable risk. Those are really the things that will make an opportunity for us and bring it into the category, we would consider it. I think the best example of one that makes that bar is iFood, right? So Fabricio is nodding. And we know that actually we could do that additional purchase because of market circumstances at that price, right? We would not be able to do that at that price at all if we were in different circumstances. So we know this business. We love this business. We love for Fabricio. And we also think the execution risk is relatively low, because we've seen Fabricio execute time and time again on new opportunities and bring them to fruition. So that's an example of something that meets the bar, and that's actually the 3 criteria that Ervin talked about that will make the difference. Then on sort of management incentives, again, like I don't decide them, but in the conversations with the remuneration committee, I think there were 2 things here. One is that we're in an unusual set of circumstances, right? And the discount, particularly at the time when those discussion happened was what at a completely unacceptable level, right? It's still, in our view, very much too high. But it was, I think, very important for the remuneration committee to be really clear also in signaling to our shareholders, how seriously the Board takes this and how determined the Board is to make sure we make a difference here. So that's where it came from. When things are -- when we're in a different spot, that may change. But again, we're -- I'm not a decision maker. Maybe Basil, you've been part of some of those discussions, anything to add.

Well, the one thing I'd add is that the account incentives have brought us to this path, right? And we've made the commitment very publicly. So they're clearly working. And I think we're aligned with shareholders. That's the most important thing here, right? Our incentives are aligned with shareholders. And if we create value for you, we create value for ourselves. And maybe, Lisa, on your third point, look, in thinking about traction and simplification, there are a couple of things to call out. First, we need to have something that we know that we have confidence we can execute, right? The second element of that is there's generally an element of regulatory approval, whether it's a stock exchange or there's an element of regular. And third, generally because it's structural and involved shareholder approvals, right? So the first one, I had complete control over timing, Ervin and Bob, everyone else. The other steps we don't have control over. So that's why we can't actually put absolute time lines on this thing. But I want you to know that it is a priority for all of us. We're working very hard at it. And if we have a good outcome on something, you will be the first to know.

All equally at the same time. So let's go to the webcast. And this one seems to be one for Prajna and Ervin, I think. So you might tag team this one. It's great to see you taking sustainability seriously in your strategy. Can you please provide a recent example of what ESG considerations might have influenced your decision-making and capital allocation? This pertains to your recently disclosed RI, right?

Thank you. Thank you for the question. I'm going to refer back to the slides that I shared before our responsible investment thesis over there. So actually, it's not -- from a recent perspective, it's every capital allocation decision that we're making, we are clearly steering away from categories of business activities and sectors that we do not want to have an exposure on. So it is not -- I don't need to share one specific recent example, but every capital allocation decision that is made embeds ESG considerations into it, and it's also in the capital management of it. Engaging with our portfolio companies and helping them get even better in their sustainability performance. So that's it. Anything you'd like to add Ervin?

The only thing I'd add is there are specific situations where your team actually assist the deal teams in assessing a given investment for sustainability considerations. And I can think of a specific example. I know you know which what I'm thinking about right now where that's invaluable for us to consider. So it absolutely affects beyond what Prajna described the decisions, but also the process.

Great. may have without -- well, maybe I actually give a specific example of , yes, that I think what you mentioned Aruna earlier, I think it's a business that besides it has a very solid business case is one that we feel is one that excites us from a sustainability point of view and actually make us more excited about entering a business like that. So it's -- sometimes it could lead to a no and in some cases, it reinforces a yes.

Great. I see Caesar there. Yes, there past the cameraman. We have an interception.

Just a quick question. Can you say what the current level of the holding costs are sort of operating costs at the holdco level and how that can be expected to develop over the coming years?

Yes. So just to make sure everybody heard it, he -- I can't see you because of the light, but what's your name? Okay. Excellent. I asked a question around what are the current -- what's the current level of the holding cost, the holding company cost? And how do you expect that to develop going forward? And Basil knows everything about that.

So -- so there's 3 aspects. There's one that relates to supporting the business and then the true holdco cost, right, Ervin's cost, my cost, Bob's cost. And that cost is -- was about $81 million for the half and it actually hasn't grown much. And the ambition is to reduce it. I won't give you the specific number yet, you'll have to see that when we put out our results in the full year because that number is available. But now that we're very focused on that number and bringing that number down.

Okay. question of top their hands waving. If you -- this could be -- got it, injured investor. Okay.

It's Cesar from Bank of America. So I have 3 questions, please. The first one for Larry, maybe on -- the first one on Larry, maybe on Swiggy. We haven't talked much about it. So -- can you please also outlay their path to profitability? Second one would be for probably Ervin, you've talked about returning to shareholders some of the proceeds potentially from exits. Would that include Meituan? And then how would that work? Because you're already returning to shareholders, the proceeds from the Tencent sales. So would that mean that you might consider paying a dividend? And then I have one final one on the structure simplification. That might have a cost. I'm not talking about legal fees, potentially more about taxation. So how do you think about it? Are you comparing the potential taxation cost or total cost of that simplification with the potential impact we should expect on the reduction of the discount?

Thanks for the question, Cesar you get your designated questions answered. Maybe, I'll start briefly on your last question, which is around do we take into consideration tax cost when we -- and obviously, the corresponding advantages? The short answer is yes, absolutely. It's a key consideration in anything we do. And in previous moves that we've made and Basil can speak to you about it at any length that you want, the tax considerations are an important one. It doesn't mean that we wouldn't do something if there are tax considerations but tax is an important part of the things we look at. And if there's benefits that outweigh the tax, and that's definitely on the table.

So -- and I'd just add, right. sometimes the tax is theoretical, right? Because the thing that triggers the tax needs to get done, right? And as an example, and that would need approvals. And sometimes, those approvals aren't there. So I think, yes, we look at the broad spectrum, tax, what approvals and apply our minds to all the topics well.

Larry?

Swiggy question on path to profitability. I guess it starts with macro in the market. So this will -- remember that India got hit with a bit of a lag from COVID. I would say it starts with volumes. The volumes are basically largely back in the Indian market to a more normal state. The core food delivery business has share positions somewhat settled. And the next big area of investment that Swiggy is exploring, sound very consistent with what Fabricio and Delivery Hero are doing around grocery and quick commerce. In terms of profitability, they'll follow their own journey there. I think the important thing for this group to note is that they have a more than fully funded business plan. So there'll be no at least based on what we can see today in terms of macro market and the company's own strategy, no need for further fundraising.

I will come back to...

Yes, I'll handle the second one. Okay. So your question about Meituan and then what we would do with the shares and returning capital. I think what you should take away is the principle. And I don't have much more to add. We don't have much more to add in terms of what we're going to do with Meituan. The principle is facts and circumstances dependent, when possible, we will look to use some proceeds to fund further growth, but also look to return to shareholders. That's the principle. So that's the spirit and focus, I think you should takeaway. And as to specific situations, facts and circumstances matter, we're not going to comment on that.

To clarify, the return can be a dividend or a share purchase in principle.

In principle, we're open-minded, but we're facts and circumstances will dictate what's best for the situation. All right. We'll go back to the webcast, and this one is for the PayU guys. What gives you -- well, sorry, Bob, you can give them to PayU guys. But what gives you the confidence that as you continue to scale the credit business, the loss rate will continue to be kept low?

Good question. Yes. Great question. Kudos, whoever asked it. Look, I think in any credit business, it's best to learn your lessons early and the pandemic couldn't be better timed if there's such a thing as a good timed pandemic. Because as the business was small and growing, we learned a lot of lessons. So 3 things. One is, I think through the pandemic, we have -- we have figured out how to diversify our sourcing of customers. I spent a lot of time this morning talking about our BNPL flywheel and selecting into customers that we know a lot about and serving them and serving them more deeply. The second is, I think it's often underappreciated that when you're a manufacturer of credit, that you are a system and when you're driving your systematic cost of capital down, you're actually able to participate in the market in a far more competitive way. So we are actually now serving more prime and super prime customers leaving the super subprime customers others to serve. So that, again, gives me confidence that there is such a lot of headroom that we can continue to serve a very large prime base, customers that have shown through the cycle resilience. Mind you, we've also seen customers who have demonstrated, through the cycle, resilience. So we know what our models can predict. And so we can serve them a lot better. So that's what gives me confidence that between the diversification of how we source our customers and the fact that we can go after segments and serve them deeply with our lower cost of capital that we will continue to serve with a lower loss rate and maintain that with scale.

Great. Here's what I saw during -- actually, Romain, your presentation, we can get to it. So the Classified business is becoming more capital intensive. What does it mean for long-term moats, investment and cash flow?

So that's definitely referring to the transactional part of classified and more specifically to our auto transaction business. So it is indeed more capital intensive as you need to fund off-line infrastructure and also inventory and car financing loans. What does it mean? It means that as you build that business and as you build it to scale, you obviously create a very strong moat for any new entrant in the market, which provide a great competitive advantage. Now in terms of investment in the future, there are multiple things we can do to reduce that investment level, which is very important for us as we want to return cash flow to shareholders and to obviously process here. The first thing is, as you've seen, we've been able, after a first initial phase of deploying capital to build our inventory level to build our off-line infrastructure, we're really now seeing the ability to leverage that operational infrastructure and really increase our volume while minimizing the additional investment. The second part is when you think about inventory, our current inventory returns are around 42 days, which is probably among good benchmark that you will see in the industry. And so as we scale our business, we've been able to increase the turnover inventory and a be a bit smarter about predicting demand and adjusting our supply to the expected demand. So you will see that we will be better at managing our inventory flow as we go. Lastly, both on inventory and financing, you should expect with time that as we create credit history or delinquency history in the market, we're able to fund a part of this capital through external third-party debt and hence, reducing the need for equity funding.

Great. Thanks. There's no one here, but okay. In the middle here, please? Go on throw it. Risk-averse investors. There we go. Are you well done. Are you good?

It's Marcus Diebel from JPMorgan. One question. We heard a lot about cost of capital and cost of capital went up and went up clearly also for a lot of your associates. Is there a view that you use your balance sheet, which is clearly healthy and you're obviously doing really well in terms of progressing on profitability to use your balance sheet to reduce the cost of capital for some of your associates, if necessary? That's the first question. And then the second question is again on ESG. I found it very interesting. Thanks a lot for the slides, particularly food delivery related. Obviously, you talked about briefly about packaging. Could you tell us a bit more what's actually happening, ideally, specifically as possible, is it really growth first and you think about this more later? Or is it really something on the ground that you're doing today already?

Thanks for those questions. And Fabricio will unleash the -- I think the fullness of us excitement and commitment to packaging. And I've been like really impressed, but I won't steal your thunder. On the first question, who would like to go?

So maybe just on -- in terms of our cash, right? We don't lend out cash, right? So we're not -- we're not a bank. We're equity investors. And as Ervin said, and I'll hand it over to him, every decision is an action, right?

Yes. I was going to say the same thing. The only other thing I'd add is, of course, in certain situations where there is a possibility to convert a debt-like instrumented equity, a convertible instrument, we will consider that, but we are ultimately equity investors in growth businesses. And then Fabricio?

Thank you for asking because I had an option to have many slides about that, but I'll give you another shirts for this question. No, I'm just kidding. I don't have it. We started working on that for maybe 1.5 years. We are pushing many, many things on the ground. For example, we started selecting the restaurants that are more green restaurants that do not -- have recyclable packaging. And then we created like a green tag and we started to separate them and promote them more. So the demand would be higher on these restaurants. Also, we started a big project to stimulate the customers to say I want to pay more to have a recyclable packaging. The reality is just like say, 70% say, I want a green package, but just 5% effectively pay more to have a green packaging. So that's what changed our mind. We have to change the whole industry to make sure that the packaging is the same size -- price or cheaper. And because he said I can talk a lot, I want to talk about that related to the drivers. Today, the electrical bike driver, electric motorcycle driver, it is cheaper for the driver to have that bike, it is cheaper for the environment, obviously, he makes more money and he paid less on gas. So it's clearly better for everyone. And for the customer, you don't pollute and also there is no noise. So you make the good for all the value chain to be more sustainable and green. That's what we have -- so we did that on electricity. It's not growing faster only because of the supply chain problem, the bikes are taking time to arrive, but we will have tens of thousands of electrical bikes. On the packaging, that's what we have to build. So after we do these 2 big projects, we did one that many tests -- many projects to pay money to people at innovating packaging. This is a big one reflects price, a big one, that's a global challenge, a big one with [ Susan ], a big producer of paper packaging. All of these projects has the objective to pay like $100,000 to a few million dollars to develop new technology on packaging. And we are committing to do big pushes when we have good technology for that. We have 2 or 3 concourse, 2 or 3 challenges on this. We have the green restaurant selections, but what we need to do is to have a much better packaging at cheaper than what we have today. We don't have it today. So it's cheaper today to buy a plastic packaging than the other one, and no one wants to pay for that. My point, I believe, like in more 6 to 18 months, we can keep making these numbers cheap enough until we really change to make the cost versus -- we really make cheaper to have the sustainable packaging. It will take more time. Is the technology doesn't exist today to be cheaper.

I think you forgot to say that Brazil won yesterday.

Brazil, yes, it's very important to say that we won, it was 4-1. So everyone In Brazil today believes that everything is going to be sustainable, peace in the world and happiness is ahead of us. So we are very confident of the packaging. Thank you, Bob, for this part.

I was going to say there's huge similarities between Irish people and Brazilians. So once you give them a mic, you can't take it away. But then when you talk about football, we can't talk about that. So we have in here on Stack. So Prashant, you're up. This is as team customers seems customer monetization grows, are there new opportunities for growth extensions and adjacencies at top of that?

Yes. Great question. So in terms of our growth opportunity, I spent a lot of time talking about, if you think about price times quantity, I spent a lot of time talking about quantity earlier today in terms of land and expand, growing the number of seats, right, starting in developers, moving to technologies and so on within companies. The other area, of course, is price. And so when we think about the levers for price, it comes down to adding a lot of value-added features, and I'll talk about exactly -- Larry is joking earlier, but there's the method to the madness right? There's adding value-added features, adding modules that make sense, right, in all -- in order for us to be able to say, hey, these are value-added things that we can charge the customer for. So when you think about what we talked about earlier around knowledge and why that's so central to what we do at StackOverflow, for us, we believe a very logical extension of that is learning because that's ultimately what we're trying to do, right? We're really trying to make sure that people in the flow of work and in the flow of doing -- getting stuck, you're trying to get unstock, and that's the best time to learn, as we've talked about. So even though Larry explained earlier that it was somewhat of an interesting sort of set up to be part of the Edtech portfolio, there are actually some tremendous benefits being part of it because the learning mechanism opens up all sorts of possibilities to add value-added capabilities to a user because it is like, hey, you're getting unstuck, but then what about things like assessments, what about things like hackathons, what about hands-on learning? So all this research that's come back from our users point to the fact that ultimately what they are trying to do is really learn. And that was one of the items around developer experience I explained earlier today, right? So absolutely constantly looking at it, both organically as well as inorganically. And that's the power being part of process because they've obviously got a phenomenal corporate development engine, and we can leverage that as asset prices decrease.

Great. I will run out of time here. So there's one there in the middle.

Miriam Josiah from Morgan Stanley. Can you hear me?

Oh, you have it. Oh, it's Miriam. I didn't see that.

First one, just on the profitability target for the first half of '25. How soon after can we expect sort of free cash flow breakeven for the portfolio? And then also within that, have you already identified businesses where you're thinking of exiting and sort of what would be the sort of time line for that as well in terms of bringing that to market? And then secondly, just on iFood, given that the sort of move to the sort of ecosystem approach, how are you sort of assessing the regulatory environment, particularly as you move towards fintech and other adjacencies?

I said we're running out of time, and you asked an iFood question. I think Basil, the first question is firmly in your field.

Sure. So we've been quite explicit about the ambition for core profitability. On free cash flow, there's some work for us to do. And Romain touched on it a little bit, right? We're looking to find to build other funders of the working capital investments. So in credit, as we -- if our business continue on a similar journey to Prashant, we could be in a situation for every dollar we put i, there's $4 of external debt, it's co-lending. There's various other aspects. So I think -- so there's no doubt free cash flow will be later, but I would be surprised if it's several years later, given all the work and the action we are taking.

Okay. And I think the second question was around the timing of crystallization. If I got it -- did I get that right?

Yes, specifically exits as well.

Yes. It's a very relevant question. And I think to some extent, I can't give you a specific answer [ this done ]. And that is -- that's not because I don't want to, but it's because not all of it is completely in our control, right? So whether an asset would be at the right stage for customization depends, first of all, where is the business in its life cycle, right? And there, we obviously -- there are several businesses that could fit that bill within a reasonable amount of time. But the other components or the second component to those decisions is what is the market environment like which, however, much we would like to control that on a monthly basis. We actually are much like the rest of you at the whim of the market. But I think the important thing to take away is that several of our businesses are getting to a point where they could fit the bill and then it's a matter for the market to be in the right place as well. Ervin, anything to add?

I just -- all of that was spot on, of course. And then I just reiterate that we are working on specific projects. So we can't get into what those are and timing because everything that Bob just said is still it affects. It's a condition, right, to getting something out is regulatory and market conditions and so forth. So we are working on specific things, but we can't say more now.

And your last question, I think, is going to be answered with Soccer score first and...

Yes, exactly. So the question is, I'm going to give a guidance, sorry, Basil. Yes, Brazil is going to win the World Cup. So you can take a note and call me if something different happens. There's another part of the question, yes. The second part of the question, we talk with the regulatory companies in Brazil all the time. We really believe Brazil is not -- we don't have anti-competitive markets because we are all the time improving, all the time, making sure that all the -- we have many players trying to offer a better service. Many players entering the market. And we are working together with the government to make sure that it is a really open market for competition. We have for competition, for innovation, for creating new things that deliver better for the customer. So this is the food delivers part. On the other 2 areas that I described, but we are small. So we are a very small fintech player. We have a very small grocery player today. So hopefully, our interest on these markets opens up for more competition, better price and more offer for customers. So we are happy to keep competing and improving ourselves in our journey.

All right. I think we'll take one more here from the webcast and then [ Byron ], you had your hand up nicely there. So let's go to the webcast first. And so we heard a lot about the payments India business, and its high potential. We've heard less about LatAm and Europe. Could Laurent discuss his outlook for that half of the business.

Yes, sure. Short answer, outlook is great. It's great business, profitable. It's growing fast. Slightly longer answer. Across border business is actually growing north of 50% year-on-year. And that's really the cross-border business that powers the Facebook, the Uber, the Netflix across all of our regions. So that one really as a part of our business that we have invested in to build what we call the PayU hub and that we want to further accelerate. The second thing is actually what we've done in India, we are starting to replicate that in other markets. Two examples. The first one is in Romania. We started actually to build a credit product with our partner, eMAG. So you can see the synergies here in action within the process group. We have started to build together a credit product. to actually manufacture the credit and also distribute the credit to all the consumers of eMAG. We want to be careful. We want to grow it slowly but surely, but this is really what we've learned from India and that we're bringing to other markets. And if it works, then we'll scale it across other markets. And the third one is our business in Turkey. It's a fantastic business that actually came to us through an acquisition, a great company called EZCO, a great team, a great product. And actually, here, we can really see that we have an opportunity in front of us to go beyond payments with credit but also broader financial services. The reason for that is actually that in Turkey, there is no real competition for us. And here, what we have is a unique position in where we can actually truly be in the middle between the merchants and the consumers we have built our own wallet. We can start again, manufacturing our credit and going to broader opportunities. So the outlook is actually quite bullish for the other markets that we cover.

Great. We have that last one here. Yes, throw an catch, well done.

Can you hear me? Very good. I just lost my notes sorry. First of all, thank you for doing this, bringing us together and adding the transparency. There's one point of feedback that I want to give. When you first announced the buyback based on purely arbitrage, I think the balance sheet wasn't in the shape it is now. So this situation has changed. And there were a couple of months where we were hoping you wouldn't sell Tencent shares, just continue with the buyback, but don't sell Tencent. So maybe going forward, maybe those situations happen again, and we would welcome flexibility. I mean, the buyback is very welcome, but maybe some of that can also come from the balance sheet if you see the strength, especially now when the portfolio is becoming more profitable. Same thing also for Meituan. Some of the best investment decisions are whole decisions, right? So please be as disciplined with that one as with everything else, although you're just getting it as a dividend, but there you have it. And then one question to Prashant regarding cycle overflow. You mentioned the ambition to grow the market from just developers to technologists and to knowledge workers. There are some successful companies in the knowledge work space that are doing that very well. What would stop you from penetrating that market? Or where do you see the advantages to gain market share versus those established players specifically for knowledge workers?

Yes. Absolutely. Great question on the knowledge worker front. We obviously have to play to our strengths, right? So I think the biggest thing is leverage the competitive moat that we have to start out, which is effectively developers, expanded to technologists. And then organically, I have to say that is already expanding it to knowledge workers, right, just based on the fact that it has so much network effects when this product is kick started within the company. That automatically, for example, I'll give you a small example, if a technologist and a company asks, what is the vacation policy for 2023? The answer is going to come probably from an HR person, who is then going to get invited to the product as a user. And so that's kind of what's happening automatically, right? When you think about what most companies have, they have product and engineering, they have sales and marketing. If you think about what a salesperson wants to ask, they're asking, "Hey, what is the latest on product 3.1?" And rather than going and knocking on the product or engineering person asked that question, they would ask it in the system and StackOverflow and the team, you see this all the time. Like Microsoft has 100,000 users on StackOverflow teams. A good chunk of those folks are outside of product and engineering. They're actually knowledge workers. Our own company, we use it across the company to onboard new people into the company, doesn't matter what department. So we see is it a very strong signal in our inherent behavior within our users. You're right in that if we move into those areas, there will be obviously entrenched players who have been talking about knowledge management for a long time, but we have our strength, which is starting out from within always start with developers, which is our biggest strength and move from there and expand out.

All right. Thank you very much, everybody. So we're going to move to the next section, which I'll ask you to exit stage right. Thank you very much. And Bob has a few final remarks. But great job in our Q&A. Well done.

All right. We're almost at the end of our day today. And before I actually close, I wanted to thank first all of you here in the audience and most certainly also everybody on the webcast. I think it's been a day full of content, and I really appreciate seeing you here face-to-face. It's been an absolute joy for me to have many of you in the same room who traveled all the way to be here. Thank you very much for that. Thanks for your attention. We've seen only faces on the states. I haven't seen any laptops out basically, which means that we probably didn't manage to bore you to death. But also a huge thank you to everybody who's involved in organizing this. [ Owen, James ] and there's a whole crew behind here that made all this possible. Huge thanks to you guys. So now we really are at the end of our program today, I think and I hope that you found what the team has worked on is a good use of your time. And I also want you to walk away knowing that we are committed to continue to create value, to crystallize value and to return value to our shareholders. As the comment that we got last indicated, we are in a very strong financial position. In our view, it is a huge strategic advantage in times like we're now. Change creates opportunity. I think we talked about that at the beginning of the day, and I fundamentally believe in that. Now importantly, while the discount to our intrinsic value persists at levels that are too high, we will continue the share repurchase program. And as you heard a few times today, that has created tremendous value for our shareholders. And importantly, it will enhance future returns. So that's value today and value tomorrow. And as we've talked about a few times, we're working towards the crystallization of value when that's appropriate for the business and also when markets are ready to answer the question that you asked, [ Oscar ]. And we've done some of that in the past, but going forward, we'll run this at a repeatable and a predictable process. And finally, we touched upon -- we got a few questions around it. We will continue to look for ways to simplify the group structure. So I'm very excited about the value creation opportunity that we see had for us and for you. In some investor meetings, actually, with some of you that I've had over the years, I've heard the term Tencent plus. And basically, it speaks to investors' desire for the group to become far more than Tencent. Well, I could not agree more. And that's what really we have been building over the last few years. And I think today, you've seen unheard that we are well on our way to become Prosus plus. So what does it mean? That means current growth plus future growth. That means growth plus profitability. It means value creation plus value crystallization. That means investment plus capital return. And that means geographical diversity plus business model diversity. So that's what we're working on for you. I thank you very much for your time, and I hope to see you again in person very soon or on the webcast. Thanks, everybody.