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

Hello partners. Welcome to our results call. We are very excited that we are running our call today in a new format. So with more content with a video today morning with our call today in video. So hope you like the change and please send us feedback, tell us how much you're enjoying the additional transparency we are giving you, and please send us feedback about how we can improve. As you saw today, we started with a, we did a good step -- good start in today's results. We are growing around 26%. Our aEBIT increased by 5x, that's a good start. We made a $13 billion IPO 2 weeks ago. We sold $2 billion in our assets. But more important, the company is moving faster, is innovating faster, is preparing to create a better future. So we are quite excited about our initial results. But the most important part, we are here for the next hour to answer all your questions. So to guide us in this afternoon, I ask Mr. Eoin, please take the leads.

Thanks very much, and hello, everyone. Excited to be here. And my job is to warm the crew up here a little bit with a few opening questions. And of course, then we will get your questions, and we'll give you instructions on how to do that in just a few moments. Well, let's kick it off with you, Fabricio. You've been in the seat now for about 5 months. How has it been? What surprised you? What's excited you? Please tell us.

It has been an amazing 5 months, 6 months ago, I was in a traffic jam in Sao Paulo. Then one month after that, I was [riding] my bicycle going to work in Amsterdam. But it has been amazing. I have the potential to travel all around the world to visit our operations to learn a lot about, Prosus, and I'm every time more excited. I see how we have an amazing opportunity to grow, to invest in regions that we are best positioned than everyone else to invest. How we can innovate a lot as a group and more important, how we can take the most of our own ecosystem, what I believe, it's a low-hanging fruit that can create a lot of value for Prosus. So I'm quite excited and looking forward for the next steps.

Okay. That's the end of the softball questions, and we'll get to the harder ones now.

Let's go.

So you've articulated the strategy in the video today, and I hope you all have had a chance to look at it. Fabricio, can you tell us a little something about the video, about the strategy. How has it changed from the previous strategy? Is it an execution thing? Is it work-more-closely-together thing? Or is it completely different?

The big difference is related to ecosystem. I really believe in having a strong ecosystem where we can understand what are the best assets and knowledge we have inside the group and distribute that to all our companies. So we spend a lot of time. First, rebuilding the culture, pushing a culture, we call it the Prosus way that is based on entrepreneurship, on taking more risks and innovating more and moving faster. I really believe you have to have this kind of culture to win as a big Internet company. Besides that, we really pushed to make our ecosystem much stronger. For example, if you do something exceptional in iFood, I have to set this bar and to replicate that or share that to Swiggy, to Delivery Hero, and to all other companies. We spend a lot of time sharing best practice, making events to everyone know each other and understand what they can learn from other companies, moving people between the company so they can really teach what they are doing well and learn from the other companies. And the results are amazing. Many of our companies are operating better and faster. Many of them are super excited because they didn't know they are part of a 30,000 people company just on our controlled companies. And the companies are performing better, and we are just starting. So culture and ecosystem are the big changes. I think we are starting to see results on that, but there is much more results ahead.

That's great. Thanks very much. And I think the pace of play has actually also increased meaningfully too. So this next question is both for you and for Ervin. So Ervin, you don't get the day off here. This is a question that I think is on the minds of most of our shareholders. And that is, what do you intend to do with the cash? How much is available to spend? Are you going to spend at all? And if not, will you return some to shareholders?

Good. I got this question from some shareholders too. First thing, my priority in the first 5 months was making our operations exceptional. It was not like let's run to invest. I don't think it's a disciplined approach, but it was, can I make sure what we have is exceptional, can I make sure that we have really best-in-class global class companies? That's what we put most of our energy. We made a lot of progress. The companies are operating better, and they will operate better. And I want to reinforce to you, we are not a passive investor. If the company is not operating better, we are going to make a lot of pressure in the company. We are going to share knowledge. We are going to change the team. We are going to change leadership or we are going to sell the company. We want to have winners. That's what we put most of our energy in the first 5 months. We try to do that with a lot of discipline. And I hope you know not only because I'm talking about, everyone talks about discipline. But because of the history in iFood about discipline built because of the business we closed or we sold over the last few months. We don't want to be operating if we can't win. And because of the investments we didn't do also in the first 5 months because we have to have discipline to invest in the right timing in the right price. I believe, and I'm certain that we will invest in companies that can leverage our ecosystem. So I'm not going to invest in random company. If there is a random company, you, our shareholder, is invited to go there and invest directly. We are going to invest in companies that we can make the company operate better or the company can make our ecosystem operate better. And then we know what we are talking about, we know the segment, we know why we're investing there. The risk of those investments reduces a lot. So we are setting up this stage for that over the last few months. And I think we are doing okay, to start. Now we want to have and we will have the flexibility to observe for opportunities. We have around $10 billion that's possible to invest today. And I want to remind you, this is a very good thing. Some people sometimes ask, but you have cash, yes, and this is good. It's a competitive advantage that we can use to create opportunities. And we are going to have flexibility to look for and to wait for really good deals. That's this stage we are now. First, fix the base. Second, knowing that we are going to invest with discipline and in segments we know and we can have an impact, wait for the very good deals. If we can find amazing deals, we are going to think better how we can reuse this -- can distribute this cash.

That's great. Ervin, do you have anything to add to that?

I Think Fabricio said it really well. Now it's not the time to be sitting on the sidelines. Now is the time to be active, prospecting for new opportunities and deploying where we can, when we think the opportunity is strong for us to produce great returns for us and for shareholders with discipline. So not much more to add.

Great. We're going to stay on you. You're the President and the man in charge of the investment process. So can you walk us through how an idea becomes an investment? What's changed over the last couple of years? What do we learn from some of -- maybe some of our past mistakes?

Sure. It's an important question. I know is on the minds of many. And I'll address your question by referring specifically to the minority investing path because that's more programmatic as opposed to M&A, which is a bit more episodic and opportunistic. In terms of investing, it starts, of course, with priorities. And Fabricio has already described very well the priority, which is the ecosystem, and that defines "the what" of how our -- what our investing teams are looking at and prospecting for. The rest of it in terms of "the how," in terms of Prosus is, I think, pretty typical. We have a global team, which is managed centrally there situated in geos around the world, prospecting for opportunities. They develop pipeline. I review that pipeline with my team every single week. We go through what's advancing, what's not advancing. Often teams want to preview deals with me to see my -- what my temperature is on different deals. Sometimes it will, sometime they won't, but it happens pretty frequently. And then we have 2 investment committees to govern earlier stage opportunities and also late-stage growth opportunities, so that's Prosus. We have changed a number of things, Eoin, you've alluded to, including how we discuss transactions at the investment committee, including our incentive systems, including the guidance we provide in terms of what meets the bar or exceeds the bar in terms of return. So we've worked on a bunch of things, and all of that has been done with the effort of improving our probabilities of investing success because investing is ultimately about probabilities. The what is, that Fabricio described earlier, helps that because we're investing closer to home. The how in terms of Prosus, we've made a number of changes to also enhance our probabilities.

Okay. Thanks for that. I hear you often talking about the pipeline becoming more healthy and healthier. So can you talk -- flesh that out a little bit? And what does that mean? What does healthier mean from a pipeline perspective, how has that changed versus the year ago period? What's interesting to you? Is it DM/EM, public/private, Give us a sense of what you're thinking there, please?

Yes. So we're looking principally at private opportunities in the investing -- minority investing world that these are, I'd say, much higher quality companies by and large. So what we saw 18 months ago, a little bit less so 12 months ago, but we still saw some were opportunities where a company needed to raise capital to survive, to bridge from one state to the next state before they could raise capital in the context of a price round. Often these were unpriced structured instruments. Today, we are seeing companies that are wanting to raise capital so that they can grow and invest and they see us as a potential long-term partner in that endeavor. So the difference is actually quite stark in terms of the type of company we're seeing. And that's why I say the quality of the pipeline is much higher than before. Moreover, I'd say that we were seeing this globally. So whereas we used to see it in certain geos -- geographies only. What we're seeing today is actually much more widespread.

Okay. Great. So Nico, I'm going to turn to you. And first, congratulations on your appointment as interim CFO. We've talked a lot about the cash position here and the strengthening of the balance sheet. Some of that is as a consequence of asset sales. Some of that is improved profitability. I want to focus a little bit on the last part and talk about our conversion from profitability to cash flow. And whether you think there's any room for any further efficiencies there?

Yes. Thank you, Eoin. I think that we've spoken about profitable growth and the importance of that. And we've really delivered on that. The top line growth of 26% and the increase in e-commerce adjusted aEBIT to move to $181 million, a testament to that. But I think very pleasingly is that, that's translating into free cash flow improvement, where we grew that by 74%. And if you look at the contributors of that, very importantly, our consolidated businesses contributed to more than a [$200 million] improvement compared to the previous period. Now we do pay some tax. We're not generally a heavy investor in CapEx or working capital, but I expect that trend to continue. So in our case, strong profit growth generally should translate into healthy free cash flow that speak to the quality of our businesses and our earnings.

Yes, we've seen some very strong growth in our free cash flow over the last few years, which is great to see. No doubt, many of our investors today picked up that we've given guidance for the first time of $6.2 billion in revenue and $400 million of [aEBIT] for the year. Nico, can you give us a little sense of what are the drivers behind those numbers? Build us up to there. And then also, why now, why are we giving guidance now?

Yes. I think that if I look forward, we've seen a very strong performance of iFood, OLX. But actually, if you look across the portfolio, it's very pleasing that all our e-commerce business is actually are growing ahead of most of their peers, but also they contributed to this increase in profitability. So I think from here going forward, we should see more of that. And in terms of giving the guidance, I think we've just been explicit about what our ambitions are and what people can expect. So the $6.2 billion of revenue expectation for the full year indicates our confidence that our businesses will continue to grow in excess of 20% in terms of the top line. And for the second half of the year that we will see continued improvement in the overall profitability of our e-commerce businesses.

That's great. Thanks. And Fabricio, we've seen a bit of this now since you've arrived, we've -- on your 100-day letter, we talked about the $400 million of EBITDA or EBIT. Can you talk a little bit of a sense of why are we giving this out? My sense is you're putting out these goalposts for the company to work harder, faster, quicker to achieve these goals. Can you give us a sense of what you think there?

Two chains that I'm trying to operate differently. We are pushing everyone to think big, to think on -- we are going to have big aggressive goals, not only for the next 6 months, but for the next 10 years. So we are pushing a whole company to commit to bigger and better goals. A second thing is it's important to give more transparency to you too. We are trying to -- you're talking about the 100 days letter. We also published a few cases about AI. It's interesting, when I joined Prosus, I was working on iFood, but I didn't know what's happening in the whole Prosus. There are so many interesting things happening here, and we don't give enough transparency. So we are working a lot to give you more transparency. I hope you enjoy and please give us feedback how we can do it better.

Brilliant. All right. So I'm going to do one more question. I could ask questions all day, but that's not what you're here for. I'm going to give one more question to you, Fabricio, then we'll open the lineup for other questions. But one of the things that I found to be most interesting in the deck and video this morning was the Prosus large commerce model. And maybe if you could flesh that out for the group a little bit because what I thought was quite interesting is how it stitches together both the consolidated assets and the ecosystem of investments. So if you can flesh that out, that would be great.

I really believe AI is going to change how all companies operate, but there is a lot also of, let's say, companies talking about that without delivery. What I tried to do in the first 5 months was to make sure that the best operations we have with AI, everyone in the group knows and we can share that between the other companies. So we published many cases about how we can use AI to operate the companies better. For example, reducing fraud or increasing sales, reducing cost of acquisition of customers, improving the customer support and at the same time, reducing the price of customer support. And you could see a big, big impact in our operations, like 20% improvement in cost per acquisition of users or 10x improvement in fraud. So AI for us is a reality that already makes our companies operate better and at a better cost. What I'm doing now is make sure what you saw there is on all our companies. But all of that was just the first step. The next steps, what we call large commerce model, what it means. We have billions of transactions of e-commerce data all around the world. Many people in the world are using AI to run better language problems or images or video. But we need to use the latest developments on AI to run better e-commerce systems. And I think we have been very pioneer in starting investing to take all our data and train models to try to understand what the users want, predict how we can fulfill what the users need or even offer things to the user that even he doesn't know he want, but that he will want to buy for us in the simplest way possible. So we are using AI models to improve substantial e-commerce. We are quite excited about that. We have, as I said, many billions of data. And now we are training models to understand how much and where we can improve our e-commerce service. We're super excited about that. Hope in our next call, I can share more results with you. And I believe we can create a real competitive advantage if this platform work as we are planning.

I think the exciting thing about it is that it also -- it benefits our current businesses, our current investments, and then, of course, our prospective investments which makes Prosus kind of more of a better partner going forward. So let's go to questions now from the audience.

[Operator Instructions] We're going to go to the first question from Will Packer, BNP.

Two from me, if that's okay. Firstly, it's clear, capital allocation is a massive focus for investors and from your prepared remarks on the video, it seems an increasing focus of M&A is trying to leverage the benefits of AI in the Prosus ecosystem to make it run faster and better. You've also stopped reporting economic interest, revenue and profits. Is it right to think that you're now more focused on investing in businesses where you have control? Has the centrality of AI change the decision-making progress regarding a big minority investor? And if so, how should we think of the split of capital between minority investing versus controlling businesses. And yes, I'll leave it there.

So let me start and others can weigh in if they like. You should not read through any conclusion from our stopping economic interest or reducing economic interest reporting and our investing philosophy with respect to minority and control. I think both will continue to be part of our playbook, and we see tremendous opportunity in both arenas. Now subject to everything that we talked about earlier, they related to ecosystem with discipline and where we can produce attractive returns. So I wouldn't read through anything in terms of our philosophy.

I agree, there is no connection between not showing that. But a few additional info on that. What we don't do -- what I don't like doing is being like a passive investor that has 5% and he just invest and pray for 5 years that the company is doing good. So this to me is, this is not our game. Our game is to say, we understand about technology, innovation, products in a few regions and a few segments. We are playing for win, so -- but can we have 20% or 30% of the company playing for win? For sure, and we have many companies and we have more. Can we have more controlled companies? For sure. And we will also acquire more companies than having controlling companies. What I don't do -- what -- I remember 6 months ago, someone asked that, but they can invest directly or through Prosus. If Prosus' is an investor, we are pressuring the company sharing knowledge or doing something aggressively to get to our winning position. But we can have 20%, 30%, and we live well with that too.

So let me follow up on that then Fabricio. Let's say, for instance, you don't have that influence, and you don't have that control. What do you do with that investment?

Look, we do everything. What we won't do is keep looking to something we're doing bad and saying, "Oh, it is there, and it's doing bad." No, we don't do that. If we have 20% or 30%, we can say to the company, it's doing bad, you need to change because not good enough. Most of the best founders, they say, thank you for the feedback. Thank you for the knowledge, and I'm going to run together for you to make these things better. That's what most of the companies react. So many people ask Fabricio, how you're going to have an interference on this company with 20%? Look, if I have nice important things to say because we are good because we can show a clear benchmark about how to operate better. The influence is say, call the guy, take an airplane and say, look, you are doing bad. You need to improve. Usually, it works very well, and we work more and more and more until we fix something. And if the founder or the other controller guys say, I don't care about your opinion. If we are a controller, we can fire the guy. If we have a bigger participation, we can ask to change management or we can sell. I have no problem in selling. I have a problem in having a small position where I can't influence the company. But remember, I value a lot founders of company. Actually, I am a founder of a company that came here, but I came from iFood. I really believe that we can make amazing things working together with amazing founders. My point here is an amazing founder listens from us, it's possible to do better. We can help and we work together for that. We don't need to have control to do that. But we are also not going to just like stay there if the things are doing bad.

Okay. So a period of much more active portfolio management. So thanks for that, Will. We'll go to Andrew from Barclays. Andrew?

Great. I've got to kind of build on some of this discussion around capital allocation. The first one is just to kind of refresh what your target level is in terms of IRR you would hope to achieve on a new investment. You used to talk about 20%. Is that still what you think about? And just kind of fill us in on that. And then the second one is to ask you about the check size you'd be willing to deploy. I guess, either in a company in your existing vertical that is clearly benefiting from the Prosus ecosystem or maybe something that is smaller and less obviously part of the ecosystem today? Just give us a flavor in terms of how much you'd be willing to spend on new investments?

So let me start on this one as well. I think with respect to return threshold, that rough 20% plus area still holds true. Of course, the size of the transaction, the size of the check, the size of the company also matters. For an earlier stage opportunity, we're going to expect more than that because of the risk that we're taking for a later stage opportunity depending on the quality of the business and the trajectory of the financials and so forth. We might be on the lower end of that. But one thing is for sure, a 20% zone is absolutely something we want to strive for. And then the ecosystem benefits, we hope are goodness on top. So we would expect that the business as a stand-alone matter. Leave aside the connectivity what their ecosystem can produce that type of return. And then by connecting with us, we can power that company to a better outcome, and so to -- they're helping our ecosystem and make our businesses better.

Just to add here to Ervin's answer. When we talk about check size, we have the Ventures area that do smaller investments, usually like $5 million to $10 million. But these are exploratory investments. For example, we're investing in 2 or 3 or 4 AI companies that are usually small companies doing disruptive things. Even in these investments, the big pressure here is, if I'm investing in this small company, there is a big correlation or connection between that and our ecosystem. If they succeed in their products, can we distribute that to our 2 billion customers. So we are reducing risks even in the Ventures smaller investments or we can do bigger investments for companies that are more connected to our ecosystem. We, for example, we -- in the slides we showed today morning, I showed 3 or 4 or 5 investments we've done in the last 5 months. I'll give you 2 examples. The 2 investments in Brazil, Shopper and Mevo. Shopper is a grocery company, and [Mevo] is a pharmacy company. Why are you investing on that? We are minority in both investments. But both investments can be leveraged by iFood. iFood can make the 2 companies be bigger. And also the 2 components can make iFood be bigger. We are looking for this kind of investment a lot. We invested in 2 fintech companies in India. And look, we have 30 companies in India. We have thousands of business in India. So investing in credit companies in India can make our other business grow faster because we have more credits, and we can make this company grow faster because we have customers. That's the idea. We are going to keep investing in business that we believe we can make them operate better. And eventually, we can do bigger checks if we understand about the segment. We can look to them and say, this is something we can do better.

And then in terms of deal size, Andrew, just to complete the thought, we will look at size across the range. We have -- I think if you look at perhaps the mode of our transactions, probably they're in the sub-$100 million per check. We'll look at over $100 million, $200 million as well. And then we will look at chunkier things. So as we've talked about, we have a playbook of both minority and M&A control transactions. When we have conviction and belief we will also look at chunkier things.

That's great. Some great examples there, too. I think it's, to your point, Ervin, increasing your probability of success by reducing your risk and connecting that into the ecosystem does just that. That's great, Andrew. Thanks very much for that. And Cesar, you're up next.

I have two. The first one, Fabricio since you've joined, looking at all the businesses, which is the one that you think has the most potential to see additional improvement in profitability, which is the one that you think has been the less well managed and that you can fix in the next 1 to 2 years? That would be the first question. And then the second question, going back to capital allocation. On Slide 37 in the presentation, it mentions that we can increase return to shareholders. I wanted to ask, does management see a link between a clear return policy and the valuation discount of the company and would it be possible to be a bit more precise in terms of the wording than besides we can just increase returns to shareholders. Would it be in the form of dividends, how long will it take? Would you consider share with shareholders some of the gains that you realize, for example, when you sell assets, like you've been selling about $2 billion worth of assets in the past couple of months. Are you thinking about these type of things? And when can we get a clearer policy if that's possible?

Thank you for the questions. So the first one, what business we have space opportunities to improve, I'm very happy with the progress with the companies. You saw iFood is growing a lot, profitability, and we expect to keep this growth rate for next year in profitability. OLX also, we are going to keep this growth rate for next year. But even the other companies, PayU is registering, after 12 months of more or less flat growth, a big growth. We had 3,000 new customers in the last 5 months. We see impact in the PayU profitability that is also increasing. Even EdTech, that is a segment that we suffered with our investment in the last 2 years, as you know. And it's not our priority today to keep investing. However, our big priority is to increase profitability. And as you can see, we increased substantially. It went from like minus [6% to minus 10%]. And we are going to breakeven in the next quarter. So my message to you is discipline, means discipline everywhere. We put everyone together and we said, we want everyone to have best-in-class returns compared to other companies outside here, and we are improving on everything. None of them, I expect the improvements you saw this 6 months, to reduce or to stop. Many people have said, so you improve and now you are going to stop. No, we are improving, and we are going to keep improving, and we are going to $400 million this year. What is okay? This number is going to keep increasing a lot. We are a big company. You should be measuring our profits in billions, not in millions. So we are going to keep improving our results over the next few years. I don't want to say more numbers now today, but they are going to keep improving. The second?

Yes. On the second question with respect to capital return and policy. What we'd say is that this is, of course, an important topic, and we are absolutely proponents of sharing value with our shareholders. You all understand we're doing so every day today with the share repurchase program and the increase in the per share that we've exhibited through this program and the reduction in free flow through this program. At this moment, I'd say that our preference is to maintain an approach focused on philosophy, which is to share value over time as we also create value at the same time as opposed to implementing a hard policy. That's not in the cards in the near term. Our preference is to maintain a philosophical approach towards the topic.

But let me make an invitation to you. There has been so many change over the last few months. We are talking about more innovation, more speed, more focus in AI. So more disciplined. The company is changing a lot. So I don't think this is time now to write now a detailed policy. It's time to make sure we deliver what we promise, that is amazing execution and discipline on this execution. So we create the basis to invest better with time. But look, I'm very pragmatic. We are going to look to that again in the future. A funny comment, if we have like in these 4 months, like invested a lot of money, I'm sure you're going to say like you have a new CEO and he invests billions and billions of dollars in the first 3 or 4 months. That's not the best thing to do. The best thing to do is to let's say, fix our -- what we have to fix in our home and wait for good opportunities, and that's what we are doing now.

Okay. That's great. So our actions will define our policy in the near term for sure. Okay. So thanks for that, Cesar, and we'll move to Monique from Citi. Monique?

Can you hear me?

Yes.

I also have 2, if I can. The first is just on the increase in the central costs. So I understood that some of the increase in the central costs, costs that historically sat in the segment. So for instance, in food delivery, there were some costs that were set in that segment that now are sitting in the central costs. Where if I remember a year ago that some costs that were put into iFood specifically, and we were told that was because the company was preparing to be stand-alone. So I just wanted to understand whether the movement of some of those costs meant that there had been any change in the thinking on the likelihood of potential value crystallization or value highlighting. I know we like to call it event for a company like iFood. That's the first question. The second question, I just had was on the profile of the profitability of the e-commerce segment. So on Slide 13, you've given that quarterly profitability. And when I look at it, I can't really discern any obvious seasonality already kind of reason, 3Q last year was much bigger profitability than 4Q for instance. I'm just trying to understand if there's anything specifically that we should understand in terms of seasonality, all that guidance for the $400 million this year and whether there's some upside potential there.

Great. So why don't, Nico, you take the first piece, then you take the crystallization/highlighting piece, and then Nico will go back to you for the...

Seasonality...

Yes. Seasonality.

Yes. So the first question was on sort of the corporate costs. And let me first say that there is no indication of any change in terms of our strategy. What we did was we flattened some of the structures, and that did mean that some people who previously were dedicated to specific segments. We incorporated into the broader corporate -- into the broader corporate functions and hence, there was a shift of some of the corporate cost. When you ever look back and you look at it in the aggregate, you would see that there was significant cost reductions, for instance, coming through in OLX as well as the payments and fintech segment as we flattened those structures. And the aggregate has actually been an improvement in our overall corporate costs.

Nico already said it, it doesn't reflect any change in approach from our side with respect to the topic of value highlighting. I think you've seen that in terms of some of the IPO of Swiggy, of course, and our decision to sell down a little bit of that and also the Trip.com sell-downs and there's more to come. So you should not infer any change with respect to our approach on that topic.

But complementing what you were saying because she asked many times about, does it change on the iFood strategy? So no connection with iFood strategy. But what I can tell you is, in one of these slides, I don't know the number. You said growth is profitability number one priority. And we are going to keep growing aggressively with profitability aggressively. Number two, it is crystallization of value focused on India. So we have first the Swiggy IPO. We are very happy with the Swiggy case. We invested in Swiggy 5, 6 years ago, and now we have a $13 billion company growing and we are going to keep pushing Swiggy to be the leader in the market. But the Swiggy story is not the end of the IPO story in India and that's our priority. We listed in the document. We have at least more 5 companies that might be public over the next year to 1.5 years in a portfolio of 25 to 30 companies. And more than 5, I'd say, more 5 probably could be public in the 1 or 2 years after that. So our priority in terms of making company public now is in India, and I believe you will have many more IPOs in India. I'm not going to comment specifically in any of them today. But I believe you have many news on IPO in India over the next year. It's not my plan now to IPO iFood today because we are focusing making Indian companies public right now.

I think the last part of the question related to seasonality. We don't have a hugely seasonal business, but there are some trends that I think that, that's useful to call out. The third quarter of our financial year do tend to be slightly a higher revenue and hence profitability quarter. It's driven by Black Friday sales across, for instance, our Etail platforms in perhaps South Africa as well as in [indiscernible]. And also in terms of our payments platforms in India, we've increased activity around Diwali. So that's the reason why our quarter 3 is slightly ahead of quarter 4. And quarter 4, in the past have tended to also be slightly bigger investments in marketing and driving some of those initiatives.

Okay. Great. We're gaining some momentum here, Nico because there's another question from you -- for you, right in from Jonathan Kennedy, [Prescient] Securities. I'll do my best to read it. Please, can you provide some insight into the negative adjusted EBIT at OLX Brazil? Is there a one-off charge in this period? Or is there a change in operating conditions.

Yes. On Brazil, the -- OLX Brazil, the business did invest more in this period in terms of increasing sort of the activity on the platform. So it's backed by a specific strategy to invest more in the period.

Okay. Great. So more of an operating expense rather than a onetime expense.

Yes.

Okay. We'll go back to the phone and Jo from UBS.

Excellent. Just a couple of quick ones for me. You highlighted a number of potential IPOs on one of your slides. Interesting, you are willing to draw out specific assets there. But also interesting you didn't mention OLX or iFood, for example, 2 of your larger wholly owned assets. Is that to say you wouldn't consider sort of highlighting or crystallizing value in those assets? Just interested in your views there. And then secondly, a very quick follow-up on Andrew's question earlier. So to be clear, there's no upper cap on the size of a transaction you'd be willing to look at if it was attractive enough.

So let me start in terms of highlighting value for a company like OLX or iFood, we do draw a distinction between highlighting or listing accompanying in connection with a controlled business relative to a minority business because in the context of minority business, there are other shareholders on the cap table, listing event is often a milestone that's important to other shareholders beyond us. And we think that the way to highlight value, the way to show the value that's sitting in that private position is through a listing event and so minority is one thing. With respect to a control position, well, if the business is performing well, there's no reason to necessarily list that business, unless it helps the company, unless there's some maybe a value differential in the public market versus the private market for that asset. And so we look very carefully about other conditions that must be true. I'd say the bar is definitely much higher with respect to a control business than it is for minority one.

But as I said before, India is our priority for that now. We have many options in terms of making company public in India, and we are executing that together with our partners in India. So the priority today is in India, but I think it's a good problem to have. After we do many things in India, we can talk about that on iFood or an OLX, but it's not like my priority for the next 6 months.

And then with respect to deal size, I said what I said earlier, we will look at chunkier, larger opportunities. We're not here to define an upper limit or a cap. We're going to be opportunistic.

And driven by return.

Absolutely.

Okay. I had to stick that one in there. All right. Thanks, Jo. And now we're going to go over to Marcus from JPMorgan. Marcus?

Yes, sorry, also one question on capital allocation, but it's obviously really interesting. Fabricio, given your background in food delivery and clearly, you bring a lot of experience to the table, would that area be of equal importance, let's say, like AI. We obviously have been very vocal about also like separate AI businesses. What I'm trying to get to is when you look at the food delivery space, almost globally, but when you look at markets like Europe, like LatAm, it seems that these markets need consolidation. Do you think that at least as wide as I can ask that the larger players would play a role in more consolidation? I don't mean this is just kind of my question on Delivery Hero. I mean this is more of context of really markets like LatAm or Europe? If you can maybe help me to understand what your current thinking is in that area.

Thank you, Marcus, right?

Yes.

For the question. We are quite excited with food delivery. We believe food delivery is a segment we understand well. I don't know if you saw the video, we are announcing many things on iFood today. For example, we are connecting iFood with payment machines. So and also with kiosks in restaurants, what triple the size of the iFood market and also offering credit and a credit card to make purchase. So like we are really, really increasing substantially the addressable market of iFood. We are quite excited about that. So that's one more reason to keep iFood focusing, executing that. Besides iFood, we are supporting Swiggy in the IPO process, but also we believe there is a lot of sharing with Swiggy. We are working very closely with Delivery Hero to try to support Delivery Hero to increase their performance or to increase their position in areas that we believe we can increase. We understand a lot of delivery -- a lot about food delivery, and we are working actively in those 3 companies. We also have DoorDash and Meituan participation. Generally, not only food delivery but the rest, we believe in consolidation, we believe in using the cash to invest in business that we can make this business better. So for sure, for delivery is an area that we are actively looking to opportunities.

Okay, so stay tuned there. All right. So we're going to head down to South Africa from Michael at Avior. Mike?

So I've got 2 quick ones from my side. The first one is on capital return. In the presentation, you mentioned that you want to increase the returns to shareholders going forward. So what are your thoughts around that? Is that in excess of the buyback that is planned for next year and the years going forward? And then the second one from my side is just on the mix of listed to unlisted investments. Prosus has about 1/3 of the e-commerce portfolio that's listed, how do you expect that mix to evolve going forward?

So let me start as well on capital return. We have no specific plans to increase our capital return relative to what we've executed to date. The share repurchase program that we've designed and been executing for 2.5 years, we will continue to run that. We've said so long as the discount remains high, it continues to remain high in our judgment. So no change there and no specific plans of increasing, but we will always look at other opportunities. You heard my comments earlier, I hope, in terms of the philosophy of sharing value with our shareholders. So we'll continue to examine the topic, but no near-term change to our plans. And then there was a second part.

Is it the mix of listed and unlisted...

I don't -- look, we don't generally invest behind listed businesses. Our listed positions are -- have become listed by dint of their IPOs when they were privately invested and then generally when they were private other than Meituan, which we were providing as a gift from Tencent in the form of a dividend. So our aspiration is for our private portfolio to continue to grow. And if they become public, as we've outlined, perhaps there will be several in the Indian market, in particular, that may become public, then the listed portion will also grow. I hesitate to give you a precise prediction as to the mix. It's candidly not that important to us. We don't try to design our portfolio with that reference point in mind.

I note on the buyback. It's one of the biggest buybacks. I think the #1 in terms of NAV per share.

In terms of percentage of shares repurchased, it's the largest in tech.

Thank you very much. So we believe this year is going to be $7 billion as it was last year. We are quite happy with the buyback, the size of the buyback, and we expected to keep it the way it is.

Great. Thanks, Michael. And we'll move now to Robert from Kepler. Robert?

Great. I want to ask a question about the Prosus large commercial model. If I understand correctly, this is kind of a model focused on understanding consumer behavior and driving engagement. But of course, consumer behavior is also more kind of a local and regional thing. So my first question is how will you make sure the centralized solution will be effective with different types of applications across the varying markets? And my second question is also regarding the large commercial model, and it's about the costs. I assume that [trained] model is quite costly, but I could also imagine that it could -- that currently, many of your portfolio companies spend a significant amount of resources tackling this problem. So there's also some room for efficiencies. But can you kind of give some clarity on the short-term impact of costs from this model.

Okay. So I think your first question, I didn't listen perfectly, but I believe it was, can we make sure it's going to work across the industries or across countries...

Across industries and across countries. Yes. Geographies.

What's his name?

It is Robert.

Robert, amazing question. As soon as I know you will be the first to know too. Look, we are in the -- we are really in the limits of innovation here. Many people are investing in models like that for other things, mostly, as I said, image, video. We are using that for e-commerce. We are using the most sophisticated technology that exists today. So the same thing, the best language models are using to train the models to how they say to the latest model they own, they can reason. We are using to understand customer behavior. So I'm very excited because we are pushing innovation, pushing the boundaries of innovation on AI. I don't expect a lot of cost. So the cost can be the orders of millions of dollars, a few millions of dollars. We're not talking about $100 million right now, but maybe a few million dollars at this moment. But the question you made, we cannot answer for now. The first design is we made, it looks like the theory can be expanded to other companies, the same way that when you train a language model, you can answer many more questions than you planned. But we will need more time to finish the training and to put it in execution in 2, 3, 4 different companies to check that. Again, welcome to a new phase of Prosus where we are taking more risks on innovation, trying to create a future. And there is uncertainty when you go this path. The bad news, maybe you're going to lose $5 million. The good news, if you do it right, we are exceptionally positioned because we are a company that has e-commerce transactions all around the world in a scale that very few companies have in the whole world. So I am quite excited that we can have good news to share. I hope I will share it with you in our next conversation.

Yes. And when we have the news to share, I'm sure we can do it on an ad-hoc basis, too. So let's then go to Chris from HSBC.

Unfortunately, I am going back to capital allocation, I'm sorry about that. I get the point about the sort of philosophical view and sharing returns over time. But I still have to ask, I mean you do have a policy of returning excess cash to shareholders, and we've seen the cash portion of your balance sheet grow quite a bit over the past years from $10 billion, $12 billion, $14 billion now to $17.5 billion, you probably correct me if I'm wrong, we need some $7.5 billion, $8 billion for the investment-grade rating. So we're talking about a potentially quite significant amount of money that is -- that could be put to better use than just the positive carriage rate. So my thinking here is on my question, what should we think about this sort of excess -- returning excess cash to shareholders? How has that view -- or does that fit into the philosophical view comment you gave earlier.

So let me a funny story.

Go ahead.

Then you give the serious answer, so the funny answer first, someone told me in a meeting a month ago, but you are sitting in $15 billion of cash for 3 years. And I said, "No, I'm here for 5 months." So I'm not here $50 billion for 3 years. I'm here for 5 months and in this 5 months, I did what I think it was right that it was increasing the quality of our operations, increasing the speed and the culture of the company, make sure we operate exceptionally well. Said that, and I think we made a lot of progress. It's time now to understand what the options and how we can move on with investment, and that's what we are going to do over the next 6 to 12 months, preserving the optionality of having this amount of cash. I'm confident that we are going to keep discipline, understanding how we can use that. And more news in our next meeting.

So maybe I'll try to answer this question by painting a contrast. So imagine a state of nature in the future where we are a business that produces as much free cash flow in our operating businesses and perhaps more than the dividend we received from Tencent. Perhaps we have, not episodic, but programmatic disposals that produce cash from our portfolio when we sell down a little bit of an IPO here and there and then we sell down other businesses at the right moment. And perhaps at that time, our investing rhythm is one that's a bit more stable because the opportunity set before us is not as attractive as what we see before us today. At that moment in time, is that a time when we would share value in a more systematic way? Again, I hesitate to use the word policy, but we understand the philosophy of sharing value, and that's state of nature where, yes, I think we would have to look at ourselves and say, why do we need this much cash on the balance sheet. That's not what exists today. Fabricio said it very well in his opening response to Eoin's question, we see an incredible world of opportunity. We think having this cash available today permits us freedom and flexibility to pursue opportunities, which is good not just for the company, but for you, our shareholders. And so we understand the motivation for the question. We understand we can imagine a world when we need to start thinking and acting in the way I describe. That's not the world we're in today. So we're very happy with what we see before us, and we will continue to look aggressively.

It's a beautiful picture indeed. And it's one that's driven by your first priority, which is an improvement in operations and improvement in cash flow. So hopefully, we get there soon. So we have a little time. I think we've got time for just 2 more questions if you have some more oxygen left guys.

We're ready.

You're ready. Let's go. Two questions. All right. We'll go to Tony [indiscernible] from the [indiscernible] .

Yes. Just 2 follow-ups on the $27 million of corporate costs that were moved from segment to group level. So we just extrapolate that $55 million for the full year? That's the first question. And then two, would it be possible to split out this $27 million per segment is, for example, one segment more impact than any another?

Nico, why don't you take that?

Yes. Thank you for that question. Yes, I think sort of that is sort of an expectation for the full year. We're not sort of giving specific numbers, but there's not much wrong with that logic. And yes, it's just -- in terms of splitting it out per segment, no, we're not doing that.

Okay. All right. So Cesar, you have the last question of the day.

The best question, the last question.

Better be good, Cesar.

A lot of pressure on me. It's a very easy one. Is the company considering to organize the Capital Markets Day in 2025 to help us understand more about the businesses and the new strategy.

Can I go for that?

Thank you for that question, Cesar.

I think you agreed with this question. Very nice question for Eoin. For sure, we will have a big beautiful Capital Markets Day in 2025. I would guess around June, I'd love to do it before that. But let's say, around June or before and Eoin will be pleased to tell you the date as soon as we close that, but you can count on having this event next year.

Absolutely. All right. So we are at time. I want to thank you all for joining us. I hope you enjoyed the new format, but I invite you to please give us your feedback to the IR department. And thank you very much. We'll see you on the road.

Partners, we are very excited about what we are doing. Thanks for coming today and look forward to keep this conversation over our next milestones. For sure, there will be many more news to share with you soon. Good to see you. See you next time.

Bye.