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

Good day, ladies and gentlemen, and welcome to Naspers Prosus Investor Call. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to Eoin Ryan. Please go ahead, sir.

Great. Thanks, Judith, and welcome, everyone. Thank you all for joining us on the call this morning. We're very excited to share the news we've announced today. With me in the room, I have our Chairman, Koos Bekker; our Interim CEO, Ervin Tu; our Incoming CEO, Fabricio Bloisi; and our CFO, Basil Sgourdos; here with the purpose of introducing Fabricio to you. Koos, Ervin and Fabricio will make some brief remarks and then we'll open the call to Q&A. I do have a challenge for you this morning though and that is to limit yourself to 1 question per analyst. And then once you do that, you can get back into the queue and we'll see you again. With that, I will turn the call over to our Chairman, Koos.

Thank you, Eoin. Folks, we really appreciate your time. Thank you for giving it to us. We'll try to do all of this in an hour and get the gist upfront. So my role is simply to describe to you the process we followed to get to today and also the result going forward. You will recall that about 6, 7 months ago we felt that we needed a new CEO at the top and we realized immediately it's going to be an important decision. In the last 40 years, Naspers had only 3 Chief Executives and if we get it wrong, it's pretty hard and expensive to change. So the Board was conscious of the importance of a proper process and it then asked Ervin to step in and be our Interim CEO for the next 6, 7 months. Ervin didn't apply for the job. We asked him and in retrospect, it was an excellent choice. He did it absolutely superbly. He took over, he stabilized the ship and today, we're in a much better position than we were, which you can also see reflected partially in the share price. Now let me describe the process the Board followed. First of all, we appointed a committee to do the interviewing, but the Board reserved the right to appoint the CEO finally. We engaged Heidrick & Struggles, one of the best international search companies to assist us. We interviewed globally on virtually every continent and in the end we looked seriously at 60 candidates of a great variety of backgrounds and styles and skills. But as we progressed, we realized that the animal we're looking for is a rather composite figure. We'll never find someone who's perfect in every respect. There just isn't someone in existence like that. Let me describe just a few of the characteristics we're looking for. One is a factor of personality. People have often commented on which people become good fighting generals or good CEOs, but it's a personality type, a little bit of insanity helps. You have to be especially rugged; you need to take knocks, you need to exude energy, you need to mobilize the team behind you. It's a tough job. I don't need to tell you that. If you just look at what the average CEO of a listed company endures in the market today, you can realize few people want that for a living. So we need to find a personality that matches this demand. The second issue, which grew in importance as we progressed is actually engineering. We did a study of what we regard as our peers, the biggest best tech companies in the world and in the end, something like 55% of their CEOs or founders actually have an engineering background; that could be electronic hardware, it could be programming. But because we create consumer products, it helps to understand how the project is physically created. And then another 20%-odd, a little bit vague number, actually learned the skill by starting their own companies young. So they were employee #1 or #3 and they learned from the ground up. But those 2 fields, either a formal engineering academic background or alternate very early immersion in building stuff, that proved quite vital and that was for us an important consideration in this role. Because we realized with artificial intelligence coming, our business will not look the way it does today. In 5 years' time, we're going to be fundamentally reengineered and for that, you need to understand the intrinsics. Then a third set of characteristics what we're looking for involved sort of a financial understanding. What do the figures mean? How does it translate into a good business? With that, doing deals, right, the ability to assess companies we might buy and we have to sell. So those are quantitative financially-oriented skills, which are also required. Then the last cluster is around, call it, representation. So as a CEO, you have to interact with investors like yourselves; with the media who are not always equally friendly on all topics; with the Board, with your staff; with governments, increasingly with regulators, you have to deal with governments all over the world. So eventually, folks, we looked at these 4, call it, broad clusters of skills. We then honed down the 60 candidates we were seriously looking at to 12. We interviewed those intensely multiple times, most of them personally. In the end, we took a short list to the Board and said this is the best we could do. These are the best candidates we could find after a process of 6 months all over the world, make your choice. And eventually the Board chose Fabricio, who we will introduce to you very shortly. Let me tell you broadly why. Firstly, Fabricio has a first class academic grounding. So he studied engineering, programming at a good school in Brazil. Then he did an MBA in Brazil at a good school to add the business components. Then he educated himself further, he went to Stanford in 2013 and did an executive MBA and most recently did a Harvard executive MBA in entrepreneurship and ownership. In between he also upskilled himself by traveling the world and speaking to entrepreneurs. So from an academic point of view, he's as solid as you can get. The second is that he is an entrepreneur who started his own company directly out from university. We invested in them pretty early. I think he's been with us for 15 years so we know him well. And he might object to me saying it, but I think initially his products were pretty poor, right? All sorts of things; ring tones for telephones and kids programming for Disney and so on. But what Fabricio had from the beginning was a team around him, a team of engineers that pivoted and pivoted and pivoted until they found a good model and for them, the good model was iFood. They're locked on when it was a company of 20 people and they built it into what is today possibly the best food company in the world and certainly very, very strong in Brazil, highly respected. Every Brazilian knows the company. So he has both academic grounding and he's got the entrepreneurial expertise. Over 15 years we also have seen them operate that we know what we have is a quantity here. I think lastly, he has the ability to build a culture. So if you look at the way he's run iFood, he's built a culture of entrepreneurship, enthusiasm, collegiality; that's exactly what we need. So after looking at all of that, the Board felt this is the best candidate we can possibly pick at the moment. Now we're fully aware Fabricio is not as experienced in international M&A, dealing with investors and so on. And we approached Ervin and said will you be our President and Chief Investment Officer and he said yes. Now we think that's an excellent team because they complement each other so well. So with that, I hand over to Ervin for just a few words and then he will get Fabricio to talk to you.

Thanks very much, Koos. I appreciate your words. I must say that it's truly been an honor for me to lead the group for the past 8 months and I'm very proud of the accomplishments and progress we've made in such a short period of time. We have reinvigorated the culture of the group. We've made real progress in improving our businesses and we put in place better processes to improve future decisions. I know not all of that is observable by the market, but we internally know what we've done. And we made substantial improvements to refocusing the organization, the incentive structures and the processes in particular of our investment team, to better align its outcomes with that of our shareholders. I'm looking forward to working closely with Fabricio to continue and accelerate that work. In my short time knowing Fabricio, I have known him to be constantly curious, a student of technology and a leader with the ability to think big and bigger. Beyond that, he is an exceptional and disciplined operator having built and scaled iFood into one of the leading food delivery businesses globally. So with that, I will turn the call over to Fabricio and with my best wishes for his continued success and the continued success of the group for many years to come. Fabricio?

Good morning, everyone. Hello. It's Fabricio Bloisi talking here. Koos, thank you very much for the introduction. Thank you for the trust from the Board. Ervin, thank you for the introduction. It has been amazing to work with Ervin over the last 8 months and I'm sure we'll keep doing amazing things together. So our first call, my intention is to talk to you about Prosus. So I am, why I am here and the priorities starting on July 1. Probably you know that I start on July 1. So we have a few weeks to start learning about the company. So who I am? I am a Brazilian. My undergrad is computer science as Koos said, I also studied a lot of management and business. I enjoy very much both things, computer science and business. But what I'm 100% focused in entrepreneurship and founding companies. So I started a company 20 years called Movile. It's nice to say that Prosus investing in us, Naspers by the time 15 years ago, it was a small company by the time. And we learned a lot from Naspers; we're learning from the South African operations, we're learning from the Tencent that has an amazing operation and was a big inspiration for us. And over the last 10 years, we started investing in iFood and it was like a quite small operation, but it became something that I'm very proud of today. I'm not sure how much you know about iFood. But today, we have close to 100 million orders, around 65 million customers per year, around 350,000 partners, around 300,000 drivers. 6,000 people inside iFood; but more than that, we are one of the best AI companies in Latin America. So we have a really big data science team that are making the company every day better. I'm really convinced that we have one of the best teams that don't only talk about AI and do nice slides about that as everyone does, but we are saving hundreds of millions of dollars today through AI. And we have very good products because we are an innovator in this area and a first mover in this area. Not only were good in tech and growth, but we have a big social impact in Brazil with education, inclusion and environment. I really believe the best companies in the world will have big social impact and I think we are doing that in Brazil. And we have one of the most loved brands in Brazil. One recent data from 2022 actually say that iFood today is in charge of 0.53% of the gross domestic product of Brazil. This is a 2022 number. We are growing a lot since 2022. So I'm quite proud to say that in 10 years, we came from a small company to an important company in Brazil. I believe we did that because we think very big, we have a very strong culture to invest in people, the best people and power them, hire the best talents and to have entrepreneurship at the core of our culture. Also I believe we are a real ambidextrous company. I don't know how much you hear about or talk about being ambidextrous company. But at the same time, we create the future through innovation. I think we are very good in creating testing product innovation. But at the same time, we are a really disciplined company. We have 10 years of track record with Prosus being disciplined on costs, on M&As that are reasonable at reasonable and good price. So be ambidextrous, at the same time a real innovative company; but at the same time a company that talks about discipline, delivering results and profitable growth. I think it's a very important competitive advantage of iFood. So that's the culture I want to bring or highlight or develop more in Prosus. I want Prosus to think bigger, I want Prosus to innovate more. But at the same time, keep the discipline that we demonstrated in iFood. Right now iFood is also going through a succession plan. We are announcing today that our Vice President of Strategy and Finance, Diego; he becomes CEO of iFood today. I will keep there as Chairman and I'll keep a shareholder of iFood. But I'm moving to Netherlands now, I'm moving to Amsterdam now and I'm very confident that I'm going to keep developing all this cultural and all this successful approach of iFood in the Prosus Group. So this is who I am briefly. Second, I want to tell you why I am here. I'm here because I'm very excited by the potential we have ahead. We are in a moment of profound change. We are in a moment that the world is going to be rebuilt. Many companies are going to lose space to innovative companies using technology and AI to change how the world works and I see that as a big opportunity. I think that's a moment where we create companies that are the future leaders as a company. We create a company that has big social impact and as I told you, I believe that we will contribute to innovation in emerging growth markets to have a social responsibility to technology. And it's a moment of change, a moment of change and a moment of opportunity to grow, innovate and contribute. Prosus today has 2 billion customers all around the world in around 100 companies and I believe our impact on Prosus through product, innovation, technology will be even more important. That's why I'm very excited. I believe there is a lot of potential to grow and to develop Prosus. As you know, I know much more about food delivery, I have been focused on that for the last 5 to 10 years. But Prosus is much more than that. We have payment business, we have our India presence that is amazing, we have our classified business in many countries that has amazing results. I think actually we have etailed in an amazing ecosystem around [ eMag ]. So actually I could talk to you a lot more. We have amazing assets inside Prosus that can keep growing and can keep growing profitably and through the change that we are having now in technology, I think we will have better and a more exciting company if we explore this opportunity. So I'm very excited to join Prosus. As I told you, I'm moving to Netherlands. And I'm sure we'll have a lot to talk about, keep innovating, improving products and companies over the next months. Said that, priorities and where we are today. Again I start on July 1. July 1 is day 1. So as an Internet founder, I want to move quickly and talk and do many things, but I start in 45 days. So I will take some time to understand the business, the people, to travel around, to know all the business personally. So I really want to travel and visit the companies and check where we can have competitive advantages and product and amazing product teams. So I will spend a good time traveling and knowing everyone. I think the best I can tell you on what I believe and how I behave is look at the iFood story. We think big all the time, we innovate a lot. We want to have big impact. But at the same time, we have a lot of discipline and we delivered consistent results over the last many years. So better than say or promise that, I think everyone joining would promise that. I can tell you that I'm doing like that for 10 years and that's a good hint about how the life is going to go on starting July 1 actually so not today. So what are the priorities for now? I'm sure you're thinking okay, so tell me what change? Take a note, take a pen, what change? The key priorities of the company remain unchanged. So broadly I'm happy with the strategy of the company, repeating that for you. We are going to continue the growth of the key business. Obviously this is the priority that Ervin has been pursuing for the last many months quite successfully so congratulations Ervin. But at the same time, delivering profitability on e-commerce. So you heard from Basil how we are doing quite well in our projections. He's here so he can talk more about that. So this keeps being a very strong priority, keep growing profitably on the e-commerce business. And as I said, that's what we have been doing in iFood. Second, Basil highlights the value of our portfolio. So you can take a note on that part too. We are confident that our net asset value is around $140 billion, $150 billion. I'm sure we had a lot of space to keep highlighting the value inside the portfolio. Third, keep the discipline on capital allocation. This is what Ervin has told you over the last few months and obviously I agree. You can see from the iFood story and Movile story, we've made many investments; none of them with crazy economics or valuations. I think you have to be very creative in product innovation and technology, but very disciplined when you're talking about return on investments. And I think that's the story that Ervin is doing for the last few months and that's what we have been doing in iFood. Fourth, continue the ongoing share repurchase program. So this program created around $33 billion in value over the last I think 18 months. Obviously it is successful and obviously we are going to continue with this program. But at the same time we remain committed to Tencent. I know Tencent for 15 years. Tencent has an amazing leadership through Pony Ma and Martin. I've been there many, many times and every time I go there, I come back more inspired. So keep learning and contributing to Tencent is still a big priority. Obviously over time I will talk more about additional areas, I will talk more about what I'm going to learn in the next 45 days. We will have lots of opportunity to talk. I talk a lot. So I'm sure you are going to have many more opportunities. Probably I can't answer all the questions today because I'm in the day minus 45, but I am excited and look forward to talk much more with you all. That's it. Let's go for questions and let's go to work.

Great. All right, Judith. If we will take the first question, please.

[Operator Instructions] Our first question comes from Cesar Tiron of Bank of America.

My question was actually to understand how you made the choice for Fabricio and not for Ervin, but I think Koos already answered that. So I'll move on to my next question. My question is Fabricio has a very strong track record in food delivery, but also in growing businesses from startups to market leaders. So would it be right to make the following conclusions from these appointment? Number one, the company could be more focused on food delivery in the future? And number two, future investments could be more focused on small tickets for early stage companies?

Fabricio, what do you say?

Thank you for the question. I have a lot of experience in food delivery. Therefore, it's easier to me to talk about food delivery now. We have many amazing assets. Obviously I like iFood a lot. But we have a great asset with Delivery Hero, with Swiggy, we have other investments in food delivery. But your conclusion that -- so that's the focus now. That's not the conclusion. I want to highlight to you we have great business in payments, we have great business in India, we have great business in etail, around the medical system and also classifieds. A quick story I haven't told you, but my company started doing mobile and then we migrate to food delivery more or less 10 years ago, but I've made other 20 to 30 other investments. There are many other segments where Movile operated. So I think the focus of Fabricio is learning where we have a big opportunity through technology and create something around that. Said that, obviously food delivery is something that I will look and I'll work on that. So that's not a conclusion, but this is the only and most important change. Then you said future investment could be more focused on small ticket, something like that. Do you want to talk on that?

Yes. Ervin, who's our Chief Investment Officer.

Sure. Cesar, let me comment here on investing. Investing of course continues to be really important also for us as a group. And what I've said to all of you before is we will take risk. Our aspiration is to do so in a thoughtful way so thoughtfully deployed. We are well aware, I'm well aware and I've said this to all of you, that in recent years we haven't done a great job of that last part, thoughtfully deployed. I've been making a lot of changes to ensure that we recover that gene and how we express our deployment of capital on the investing side. And how will we do it? Well, in areas where we know something, where we have more understanding, of course we'll be more prepared to take more risk in larger checks. In areas which are newer to us, you should expect smaller checks, but that's a general guideline. I think the facts and circumstances will always dictate what we ultimately do.

The next question comes from Will Packer of BNP PE.

So was it in September last year you had $15 billion of cash on hand. And so could you help us think through the appeal of acquisitions versus more returns to shareholders? Within those returns to shareholders, the buyback has strong support from your shareholder base, but is broadly maxed out. Would you consider other forms of shareholder return eg. special dividends, tender offers and what tax considerations would we think through?

I think Basil is our Chief Financial Officer.

Will, thank you for giving me the easy question. So indeed well, look, we have a meaningful amount of capital on the balance sheet. But there's a couple of things we need to understand. First of all, that's not all available, right? Half of that capital has to stay on the balance sheet to support our investment grade rating. So once you put that aside, there's $7 billion, $8 billion that sits there. We've communicated historically that the intent of that capital is to support our businesses and look for new areas. Ervin has taken you through how we think about that and how we want to improve our deployment on that front. In terms of return, the open-ended share repurchase is impactful. Fabricio has called out delivered $33 billion of value. It's one of the largest return programs out there. It's made tremendous impacts on the discount, but we continue to work on that and build on that. And beyond the buyback, there's other things we can do to address a discount, to grow, to grow profitably, to highlight the value. In terms of further capital return, there's no decisions. The Board hasn't said anything on that front. So for now, as Fabricio outlined in his talk, the strategy remains fairly consistent.

Just mention when you report financial results again?

Yes. So on the 24th of June that the results are approved and then we'll discuss them in quite a bit of detail with you.

The next question comes from Monique Pollard of Citi.

My question was 1 really for Ervin. Just trying to understand what the new role of President and CIO means and how that differs from the previous role as CIO and he will ultimately be signing off, I guess, on the investment decisions and the capital allocation decisions.

Monique, I think the new role is representative of a broader mandate for me at the group than my previous role as CIO. I will say that Fabricio, as he's already mentioned, starts in 45 days and we're still discussing some of the details of that and in time that will come out. But you should understand it to be a reflection of what I've been doing, which is contributing broadly across the group as Interim CEO and as President and CIO, I will continue to have a broad impact across the group with further discussion to come with Fabricio. In terms of your question on capital allocation, who makes the decisions? The group CEO, Fabricio, who's coming starting July 1 is authorized to make that decision of course subject to limitations, the Board has to weigh in on certain thresholds and so forth. That will continue. And at the same time, I will tell you that I will be an important voice in that discussion. So Fabricio and I will work very closely together on capital allocation alongside Basil and other members of our Investment Committee. I will stay very involved. Fabricio though as the CEO will have the final say.

Monique, it's Fabricio. Just to reinforce on that. I think we've been working together very well for the last months, me and Ervin. And he takes care of the whole company today. Prosus is a quite big company with lots of demands and opportunities and that's what we are going to structure now to put a few of the business responsibility, but this is something true July 1 when we check again the org chart.

The next question comes from Joe Barnet-Lamb of UBS.

Rather than asking you, Fabricio, about sort of wider capital allocation where you may not yet be able to comment. Coming from iFood, I wonder if I could ask you a couple of sort of food related questions. The food delivery industry is under a lot of shareholder pressure to be more prudent, rational and push for profitability. As a food delivery operator, but now incoming Prosus CEO; can you just talk a little bit about how you stand on that sort of spectrum and that debate of pushing that industry to profitability? And perhaps related, many argue that the food delivery space is ripe for consolidation. It's conceivable with your current positions that Prosus will be at the center of that. What's your view and willingness to engage in consolidation within food delivery?

First, I think we are still in closed period so I cannot talk about the last iFood numbers. But you can see for the last 2 years, you talked about the pressure on cost or on profitability in food. iFood has one of the best profiles of the whole industry so it's possible to grow, innovate and deliver our reasonable results. Our results consistently are increasing, are doing good and we are still investing more in social impact drivers. So I'm quite confident that it's possible to create and to have an amazing business in food delivery. That's what I know very well, iFood. I don't know the details of the other business because as I told you, I'm joining on July 1, I just know the public information about the other business. But Prosus today is supporting them and is supporting them every time and more. So Prosus is closer to Delivery Hero and helping more Delivery Hero over the last few months. It's closer to Swiggy and helping more Swiggy obviously. The fact I'm joined, we have more space to collaborate between the business or to try to share best practice. That's my goal. In terms of consolidation, I'm going to start understanding the other business over the next 45 days and there is no change in our current strategy. So no change on that or no specific plans on anything related to consolidation.

The next question comes from Christopher Johnen of HSBC.

I'm curious on the new incentive structure and the sort of expectations that go along with the 2 new roles, both for Fabricio and Ervin. If there is any more color on how that is set up, what are short-term, long-term goals? That would be helpful.

Maybe I'll respond, Christopher. So we'll deal with the whole remuneration structure, which is such an exciting topic these days in corporate reporting, in our annual results. So we will publish extensive analysis in the annual report and then Craig Enenstein, the Head of our Remuneration Committee, will present to you and discuss it. So we'll do a proper review of it once we've settled all of it.

The next question comes from Marcus Diebel of JPMorgan.

My question is regards to capital allocation. Fabricio, you mentioned also AI briefly in your statement as one of the next growth drivers, we all on the call will agree to that. But what would you say given the new setup of the Management Board? What is really the edge in terms of competing? I mean it seems AI is very much dominated by U.S. tech. Most of these players are pretty cash rich. So how do you make sure that you sit at the right tables at the right time when interesting opportunities arise?

Nice question. Sometimes people, if you talk about I'm going to invest in AI, you can react. So you're going to do a large language model and spend a lot of money. This is not what we are doing. Actually I think there is 3 or 4, maybe 5 companies doing very big investments in large language models. I think you should understand AI as electricity. It's going to change how everything work; everything, absolutely all companies, absolutely all products. We don't produce electricity. We just connect it to some network and we use that to create new products and services. I think Prosus as a group, we have close to 30,000 people and close to 10,000 people all in technology in controlled companies and much more if you're talking about investment companies. Most of our investments in revenue are in growth markets or emerging markets. I think we are one of the most amazing, in my opinion, emerging markets e-commerce portfolio. We have 2 billion customers in total. The amount of disruption and opportunity we can create to these customers offering better service to them is -- remember we didn't have a smartphone 15 years ago and we can't get out of home today without the smartphone because otherwise we will get back running desperate because we can't leave without that. We'll have the same impact in our lives in the next 10 years. So there is so many opportunities for our 2 billion customer that doesn't include large language model production. A quick example on that. iFood is super innovative in AI and we use everyone; we use open AI, we use Prosus AI assistant, we use Gemini, we even use open source solution like LLaMA from Facebook. And this is the kind of approach we have to have. We are in a group in growth markets that has the responsibility to take these solutions including open source solutions to billions of customers in emerging markets. We can do that leveraging our position, our team, our products today. That's the approach and I think we will have lots of news and evolutions here. There's lots of opportunities to develop.

The next question comes from Kevin Mattison of Avior.

The appointment of the new management is a break with the past and you have a very diverse portfolio. What will be the Board's and management's philosophy towards the underperforming aspects of the portfolio? Is it something where you're going to have a look, you evaluate, see if you can turn it, maybe put a little bit of money or do you think there's an opportunity here to focus on the more exciting and high performing aspects of your asset base?

Kevin, of course you're one of our most thoughtful analysts and one of the people that understand the business best so you ask intelligent questions. Let's start with Ervin and then Fabricio can add to that.

So Kevin, the portfolio we have to manage it as a whole of course. And in terms of prioritization, you will see us emphasize what I have been calling our gems, the great businesses within the portfolio. But we also have been in significant fix-it mode for 2 years. We will continue to try to find great outcomes for some of the underperformers. Sometimes we will choose to exit, we will shut down or we will sell. Sometimes even if we seek to sell, there's no bid for the business and so the best thing for the group is to try to at least ensure that, that business in question is not a burden to the group. So you'll see us enhance the operating profile of some of our underperformers just to get it to a place where it's no longer a burden. In all cases, you should know that we have to fix and improve the underperformers in addition to investing and focusing on our gems. We do have to manage the portfolio as a whole. Fabricio, anything else?

I'm 100% aligned with Ervin. I'll just give you a few stories to prove my point. You may think I am like a founder of Internet, I like innovation therefore. I'd just like to keep doing everything and keep experimenting. That's not the story of my company. Just to remember, Movile had at least 10 to 15 investments. We sold like half of them when they are not giving results. We sold or closed half of them. So I am a passionate founder that also says this is not working. I'm also passionate about growing and delivering successful business. So it's not working, it's not working. You work hard to fix it and you have to fix it so you face the brutal facts. You have to reduce your push to move faster and if it doesn't work, you sell or even close it. So I've done that like 10x to 15x around Movile. I think Prosus has a much bigger and more complex portfolio. So I'm not ready today to talk about the whole portfolio because it's very big and complex, but I will be in a few weeks. I think I can help more in the fixing part because I have a lot of experience in operations. And I think I'm very 80-20 in terms of saying this works, the rest doesn't work, the distraction. So we have to solve it somehow, what includes reducing, optimizing or even selling or closing.

The next question comes from binding with [ Harvinder Singh ] at HSBC.

My question is to Fabricio. How do you plan to tackle the Indian opportunity given your experience is mainly in Brazil? Is there any specific learnings you can think of, which would help in scaling the Indian businesses better or make them as successful as iFood? And what do you see as your biggest challenge there in India?

You said that most of my experience is Brazil, it's true. I leave it in Brazil until yesterday. However, I am traveling all around the world and really learning with the best opportunities in the world. Like to me visiting India and China is -- I think a good thing of this new position is that I have to visit much more often India and China. I really love it. I used to go to every year and take like 15 to 20 people of iFood to India and China because I really think you grow faster when you learn from everyone in the world what they are doing best. So learning from China, obviously is an inspiration through Tencent. On India, we have Harsha and other Swiggy team. I think we've done many things in iFood. For example, they are being very successful in the dark stores in the grocery area and we are looking it closely. We have many ventures investments in India also, for example [indiscernible] and many others, at least more to 20. So my approach to India is you can expect me to spend more time there and learning much more and thinking how we can use our global structure to leverage our India position. This is not a simple solution because I don't deal very well with pepper food -- how do you say that? Spicy food. So I will have lots of challenge, but I will manage that and I will be in India learning a lot over the next few weeks hopefully.

The next question comes from Cesar Tiron of Bank of America.

Sorry, my questions have been answered.

The next question comes from Nadim Mohamed of SBG Securities.

Also congrats to Fabricio on the appointment. Just 1 question from my side. On iFood, you mentioned that the data center team has saved hundreds of millions of dollars through deploying AI and other technologies. Just wondering if you could give us some color through maybe 1 or 2 stories on the kind of successes that you achieved? And also how do you think this could be deployed more broadly across group level?

Thank you, Nadim, for the congratulations. We talk a lot about AI in iFood for 4 or 5 years. AI is the buzz in the next 18 months, but actually it started probably as you know 30 years ago. So in iFood, we made 2 big acquisitions; not big in price, actually it was like 50 people company, but we made 2 big important acquihires I think 4 years ago. So we have like a quite big AI team. I can tell you everything in iFood is AI oriented today. So we make I think 15 billion inferences per month that is conclusions of AI about how the app should behave. If you just open the app; what you see the restaurant, the order, the promotion to you, where we are going to suggest the drivers to be, what kind of food, everything you see in iFood including the delivery time, everything is defined by AI to make inferences about how do you behave or what do you like. Every 15 days we update our models in the whole company and we check. We do testings for everything. So the AI thing, some people expect like a robot that talks and do crazy things. But what we do is that every week we can increase conversion rates and reduce acquisition costs by 1%, 2%, 3% because the new model is more efficient in handling things that we are doing for 5, 6 or 7 years. So most of this -- the number is close to $200 million in savings just on AI things. Most of this is things that can be simple. Are you going to offer these restaurants or these restaurants first? Then if you offer the right one and you optimize that every week, you increase 0.5%, 1% every month and the whole results get better. We have lots of impacts in other more, how can I say, fancy things. So we have like interface to people talk through [ chef ], they make orders through chefs. So we can do interface to do the chef to not only make your orders, but to talk in the call centers. So even our internal call center team, they use AI to get recommendations about how they should serve better the customer. The external customer and the drivers, we deliver around 2 million to 4 million orders per day. So most of the feedback to the customers are done through AI systems. I want to highlight 1 or 2 things specifically, fraud detection and all kinds of fraud assistance. The level of improvement on AI were dramatically. So we really can operate the business much better in terms of costing less to support the customers and to, how can I say, reduce bad behavior of customers. Other funny or interesting ways to do that. For example when they join iFood, they can take a picture of the user generative AI, the picture of the existing menu. We automatically import everything. We prepare the whole menu. We put the pictures and we improve the quality of the pictures in terms of light and the descriptions. You can even ask help then to describe better their own food just taking the picture of their menu. So it increases sales of the restaurants, reduce the time the restaurants to get into the platform and makes the experience of the customer better. I have 30 examples like that. So most people when talk about AI, they think about like how this robot is going to change my house. There is no robot. It is everything you do is simpler, faster and cheaper. And that's the approach we have to have, have very good people improving all the business every week, enhancing models.

The next question comes from Will Packer of BNP PE.

Fabricio, I wanted to ask regarding the Meituan stake as someone steeped in the food delivery industry. Historically, Tencent has been Prosus' sole China play. But with Meituan exploring international expansion whilst Tencent consolidates its third-party stake portfolio in China, could we see the stake as more of a long-term strategic holding complementing iFood, Swiggy, Delivery Hero, et cetera or should we think of it as more of a short-term holding like JD.com was?

Will, I like very much your question. Therefore, I'm going to ask Ervin and Koos to help. The difficult question which let me ask you. I haven't even talked to Meituan today yet and I have to spend some more time studying that. But Ervin, the smart guy in the room, can help on that.

Meituan, as we've said, actually from the very beginning when we received this gift from Tencent is a hybrid for us. It is, yes, the listed asset. We have a small position in terms of percentage shareholding and in that breath, then we should think about it as more of a financial holding. At the same time because it is food and because the business is an excellent business where we can learn from each other. In point of that, Fabricio and his team actually last year and Fabricio can share more color, visited that [Audio Gap] they're doing in China because there are initiatives that they've been successful in executing there, which we can try in Brazil. So for that reason, Will, this has always been a hybrid. We will though I can assure you look at it in a very dispassionate way as we look at any of our businesses with respect to how it's performing, it's return potential and the like.

The next question comes from David Smith of Investec.

Koos, this is for you. Considering 86% of your NAV is listed, can you frame how the Board thinks about the CEO role? In your view is were you solving for an excellent operator or are you trying to solve for an excellent portfolio manager role and how you balance those 2?

That's a very good question. And that's exactly what we tried to figure out in this search and interview process. And basically you find 2 types of career paths. Someone either comes up the business line typically MBA and goes into a financial direction and M&A direction and so on and is skilled in that field and that often goes with good communication skills and ability to talk to the media and so on. That's 1 cluster of skills. Then you get the more engineering operating side and it's very seldom that someone is equally balanced. So as we progress, we realize that at the moment we need to think more about engineering than M&A and the reason is when we entered the Internet, we didn't have assets. So the only way to get assets, buy them and that emphasizes the assessment, the M&A part. At the moment, we have some very good assets. We also have some poor ones we need to get out of or sell away. But we have very good assets, but they need to be managed. And what makes the engineering demand especially what's happening with AI. So in my life, I went through a few transitions. One was open advertisers support of television moving to pay TV and eventually pay TV knocked the stuffing out of everyone else because it was the revenue model that worked. Then mobile phones taking over from fixed line. You remember a time when AT&T was running the world, most solid company in America and fixed line completely disappeared as an economic entity and then later the commercial Internet. Now what's happening with AI is at least in my assessment something of that scale and order. The way we look at it, either we attack with HI as our friend and we invade other people's territory or we grow or we'll get wiped out. We won't be the same company 5 years from now. There's no chance, the technological switch is too huge. So there's definitely been a shift in our thinking towards an engineering style to say firstly, we've got great assets, they need to be run. Let's run them as well as we can; stay close to the customer, close to the product, provide a really good service and the money will follow the customer service. And then the second big consideration is that at this historic moment, AI is impacting, it's an explosion and we need to transform our company for the new world. And that's what we hope Fabricio help us to lead us in.

At this stage, we have no further questions. I will now hand over to Eoin Ryan for closing remarks.

Great. Thank you all for joining. Our next call will be at the end of June, as Basil said, on June 24. And of course if there's any follow-up questions, please reach out to us here in IR. All the best and thank you very much.

This is Fabricio. Thank you very much. Pleasure. Next time I hope I will talk much more and look forward to talking more. Bye-bye.

Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending and you may now disconnect your lines.