Good day, ladies and gentlemen, and welcome to the Naspers and Process Results Call. All participants are currently in listen only mode and Please also note that this event is being recorded. I would now like to turn the conference over to Mr. Owen Ryan. Please go ahead.
Thank you, Chris. Hello, everyone, and welcome to the Naspers in process first half twenty twenty one results call. On the call with me today is our CEO, Bob Van Dijk and our CFO, Basil Skordos. Bob and Basil will walk you through the operational and financial progress we made during the period, and then we will open up the call for questions. During that section of the call, we'll have the broader management team available to answer questions.
As you know, Prosus is a subsidiary of Naspers and its financial results almost completely account for Naspers' results. To ensure that shareholders of Prosys and Naspers are provided with the information simultaneously, we're having one results call focusing on Prosys' results, but where necessary, we'll highlight the impact on Naspers. And with that, I will hand the call over to Bob. Bob?
Thanks, everyone, and thanks, everyone, for joining the call today. The world continues to grapple with the effects of COVID-nineteen and many countries are heading back into lockdowns and we remain in a period of great uncertainty. And I wanted to start this call with my very best wishes to you wherever you are in the world and my hopes that you and your loved ones are keeping safe and healthy. So on the call today Basil and I will take you through the operational and financial progress of group as we navigate the current operating environment as well as hit some of our key priorities for the coming year. So the first half of twenty twenty one was challenging to operate in, and I'm proud of how the group has navigated the tough times that we saw.
So we're in performed well ahead of the expectations we had back in March when visibility was severely limited. So today, we're 8 months on and we're operating with a greater degree of clarity and our business has become fundamentally stronger. This is driven first by an acceleration of usage levels in consumer Internet and second by our business' scale and our preparation for such a shift. So I'm confident this will manage value for our shareholders over time. So let's start on Slide 5 by looking at the highlights of the strong period.
We adapted very quickly to the new operating environment presented by COVID-nineteen. So our businesses are naturally positioned to benefit from the shift of consumer time, spend and habits to online, and this was in clear evidence during the period. So as a group, we delivered the strongest set of results we've delivered in quite some time with revenue and trading profit growth accelerating meaningfully. We closed several important transactions as well. We enhanced our market positions in key verticals and classifies.
We increased our exposure to digital remittances and payments, and we made a more significant push into the fast growing FX space that has been transformed this year. Importantly, as stock valuations expanded, we remain disciplined in deploying capital. We have roughly $10,000,000 in gross cash, and we have now built up the flexibility to invest across our segments and in our own stock when there's an opportunity to create value. 3 weeks ago, we've announced our intent to keep just that and purchase $5,000,000,000 in shares at non interest closes. As we continue to trade at a very steep discount to our net asset value, I'm confident that this will create financial value.
Let's now turn to Slide 6, which summarizes our strong financial results. Basel will discuss it in more detail shortly, so I'll just highlight in our key points. So group revenue grew 32%, driven both by Tencent and an impressive 51% growth from our e commerce portfolio, which accelerated from 28% growth in financial year 2020. This acceleration in e commerce growth was driven by very strong growth across food delivery, e tail and ventures as well as a strong recovery in the classifieds and payment segments in Q2. With trading profit and core headline earnings growth was also strong.
Turning now on trading profits, we saw a particularly significant improvement in businesses, but we have been investing to scale ecosystems over the last few years. Most notably in food, where losses reduced by almost $100,000,000 and in e bill, which recorded its first ever period of profitability. Turning to Slide 7. The chart on the left hand side captures nicely what we have seen play out firsthand in our operations and what I've alluded to on this call, and that is the rapid and exponential adoption of online models over a very short period of time in 2020. So this chart is based off OMS and the U.
S. Department of Commerce data, and it shows the equivalent of 7 years of gains in share of online retail in just 1 month, which is truly selling. And as we approach the back end of the year, it's clear that these trends are continuing and becoming more structural. We're seeing this in our own e tail and food delivery businesses where our platforms are providing new and vital demand for 3 piece salad and for restaurants. For example, in Brazil, Ifood became an absolutely essential platform for restaurants and it added 98,000 new restaurants off the base of 160,000 was outstanding.
So seeing this trend play out in classifieds, online payments and also in FX, where our investments have become significantly more valuable this year. So let's move to our operating segments, starting with classifieds on Slide 8. So the OLEX Group has an eventful year and it's making substantial progress. Over the last few months, we completed the merger of OffRock and Lendo in the U. S.
And the merger of DuBazo with EMPG in the Middle East. A few weeks ago, we also completed the acquisition of a leading real estate vertical in Brazil, Grupo Gap, which is representing a major expansion into the real estate vertical, and it's giving us access to 70% of online agents in Brazil. We continue to focus on strengthening our presence in key verticals and rolling out new convenience models such as pay and ship, which already has good traction in Eastern Europe and In Russia, Avito has gone from strength to strength as a multi vertical leader. This year, we ramped up marketing substantially to drive market share gains and enable the business to grow. Within Europe, Poland is our largest market and again the focus here is on full verticalization into jobs, real estate, autos and general gas atones.
The creation of Olex Autos brings together our auto classified platforms with transaction capabilities from the Frontier Car Group which we acquired last year. So you should expect us to continue to expand Olex ecosystem to get closer to the transaction to our partners and to end customers as the business develops into a highly profitable market leader. So in terms of growth, our food businesses had a breakout year as we show on Slide 9. What we've seen in 2020 confirms our view that food delivery represents a massive opportunity and overall growth has accelerated this year. In the period, our food delivery segment grew GMV by 69%, while trading losses improved by 33% to 178,000,000 187,000,000 dollars Gross was driven by increased customer loyalty through increased frequency of monthly orders and by restaurant loyalty through reduced churn.
Outside of our investment in Delivery Hero, which reports its results separately, our businesses have been impacted in very different ways. So in Brazil, Ifood's results have been outstanding. So Ifood grew orders by an impressive 111% and revenue by more than 200%. Importantly, the Ifood platform has provided the opportunity for many businesses to continue to operate during the pandemic. It's provided them with much needed demand when the alternative would have been to close their doors.
In the 1st 6 months of the year, Ifood added 9,000 new restaurants onto the platform up to date to 160,000, which is great. It is now processing 44,000,000 orders per month in Brazil. The 1P delivery business has performed strongly, and it has increased its share of total orders to nearly 35%. This growth has translated into an almost $100,000,000 improvement in profitability, driven by continued strong order growth, more effective marketing and more efficient driver routing. Ifood acquired Sitemercado in September, which is an online grocery platform in Brazil.
This will help IT to expand its products assortment and offer customers greater convenience. Strictly, India on the other hand was negatively impacted by severe lockdowns, which materially impacted the supply of restaurants on the platform. So while restrictions hit revenue, management has used the opportunity to drive efficiency and to position itself for future growth. The trading losses improved by a meaningful 40%. The core of the Swiggy business remains strong.
And encouragingly, in recent months, Swiggy has been on a steady recovery. At the end of September, the calendar month September, the business is operating at approximately 90% restaurant capacity and at 80% to 85% of pre COVID-nineteen order levels. So if you take me to Slide 10, to payments and fintech. Overall, PayU reported strong results and it grew revenue by 29% year on year. And that's despite a very slow start to the period in India due to the pandemic.
So overall revenue in total actually accelerated year over year driven by a strong performance in Europe and in Latin America. Trading profit was flat over year, and this is because we increased our stake at PayCents in December 2020, and with that came an increased share of the business' losses. This offset the growth of profitability from the core PSP business. Regionally, our business in Europe and LatAm grew payment volumes by more than 50% as more transactions shifted online and local regulations supported digital purchases, particularly prevalent in Poland, in Romania, Turkey and in Colombia. Initially negatively impacted by lower transactions in the travel and in hospitality space.
So last year, travel generated 17% of PPV and this dropped to 3% this year. As a result, we only saw 5% year on year PPV growth in India in Q1. However, as lockdown regulations eased and new sectors like financial services and e commerce saw increased rates of digital payment adoption, TPV growth in India bounced back to 43% in Q2 in local currency. This increased diversity in category mix will benefit us in the long term, in particular when travel and hospitality recover. It's also worth mentioning that Turkey was our fastest growing market after strengthening operations with the acquisition of EVCO last year.
In August, we also invested further $53,000,000 into Remitly, which is our investment in cross quarter remittances. During the period, Remitly saw a 200% increase in new customers as consumers moved to online remittances instead of offline. In credit, during the period, we air backed the business in India as the regulator initially imposed a loan moratorium. Given the rat is a small size of the book, credit losses as a result of COVID-nineteen were not significant. We have now expanded our product offering.
And we are optimistic about the credit opportunity in a more normalized environment. If you can take me to Slide 11, I think it's worthwhile to spend some time on our Fintech portfolio. It's another area where we've been early investors and an area which has grown significantly in value. So including the recent investment in Skillsoft, which is due to close in the New Year, we've invested €1,100,000,000 in trading businesses and we're already seeing excellent returns. So the sector has strong momentum and our enthusiasm alone increase this year.
So COVID-nineteen is really providing a generational tailwind for the segment. In the last 6 months, a considerable amount of demand has been brought forward and broader user needs have emerged. The amount of progress in a short period of time is really starting. In August, we also invested in neuroditis executive education. It's a company that offers postgraduate education by partnering with over 30 universities during the lives of Harvard MIT in Colombia.
They've already launched 100 courses in 80 countries. We've now committed $500,000,000 into Skillsoft, which is the world's leading corporate digital learning company. It has 45,000,000 learners across more than 70% of Fortune 1,000 companies. The business has scaling users in revenue and in profit. And once the acquisition of Skillsoft by Churchill closes, it will represent a very attractive way to extend its leadership position by driving further consolidation in the industry.
On the right hand of the slide, you can see the momentum for all of our investments. Udemy, for example, saw more than 400% growth in enrollments, and Baidu saw 180% growth in students on top of very high growth rates over the last few years. Beyond the pandemic, it's becoming increasingly clear to us that all areas of schooling and professional life can and will be augmented by EdTech, as students and employees will need to continuously redo. We're really pleased with the progress in EdTech. In a short period of time, we have learned a lot.
We've created a significant amount of value. And with the skills of the investment, EdTech is on track to become our next segment. Let's now go to Slide 12 for a look at how we've deployed capital so far this year and our general priorities for capital allocation. So simply put, we look to invest in growth assets operating in growth markets, and we can make a return for our investors that is far in excess of our cost of capital. And this philosophy drives our decision making and advises their potential investments, big or small.
Our ambition and intent is to deploy capital across each of our core segments to enable them to scale profitably to leadership positions. In each of these segments, we have already created substantial volume, more than doubling our investment synergies. In the first half of the financial year 'twenty one, we invested close to $600,000,000 mainly in classifieds, payments and in net debt. There are a few additional deals still left to close, and the M and A pipeline remains strong. We will continue to stay disciplined, which is the key to good returns and also to our ongoing ability to maintain impairment rates below 10%.
So when valuations are high globally, we can take advantage of our financial flexibility to crystallize more value for shareholders through investing in ourselves. This is why we recently announced a $5,000,000,000 share purchase program. The details are on Slide 13. So Prosus will buy back and cancel up to $1,400,000,000 worth of its own shares and Prosys will buy up to $3,600,000,000 shares of Naspers. These shares will be held in treasury by Naspers and excluded from Naspers' per share financial metrics.
And we see this as an excellent opportunity to create value for our shareholders. And buying back shares is an investment in the group's current strong Internet portfolio with a good use of capital given full market valuations in consumer tech and their sizable consolidated discount to net asset value. So we are lucky to be in a position now where we can comfortably invest in our business and in our stock, and we believe this will generate a strong return. And I'm very pleased we've gotten into this position. It really reflects the evolution of the group, and it's made possible by continued operational improvements and the increased financial flexibility that Basel and his team have been working on for years.
So we remain committed to reducing the consolidated discount, and work is ongoing to investors. We will prioritize action that is lasting an impact, and it maintains our long term focus to invest and deliver good returns for our shareholders. Action that we take needs to benefit both us and us to shareholders and limit friction costs for our shareholders. So the buyback underscores our commitment to build and crystallize value across the group over the long term as we outlined on Slide 14. Over the course of the past 10 years, we've invested SEK 13,000,000,000 across our businesses and the portfolio is now worth more than 3x that.
And we've worked hard to put slight value for shareholders over time. You can see here on the right that we've unlocked over €20,000,000,000 for shareholders. There remains a significant opportunity for us to create even more value. You will see from the results today that our recovery businesses continue to make exceptional progress with 51% overall revenue growth and a significant improvement in profitability and cash generation. And it is essential to ensure that this value is reflected in our share price, which today I believe is clearly not the case.
And by continuing to take sensible financial and structural steps where possible, such as a share buyback, we can increasingly unlock this value. So with that, I'll turn the call over to Basil. Basil, go for it.
Thank you, Bob. Hello, everyone, and thanks for taking the time to join us today. I hope you're all keeping well and staying healthy. In this time of uncertainty and challenge, I'm very pleased with the strong performance we've seen. As Bob mentioned, we've adapted very well and the group is operating with a great deal more clarity than we had during the first phase of the pandemic.
While forward visibility remains challenging with rising COVID-nineteen cases in some of our markets and the uncertainty of the longer term impact of the pandemic, I believe we emerge as a stronger company. The results are the strongest possible endorsement of the significant long term value creation potential of the high growth markets, business models and segments you're invested in, a very important takeaway for you, our shareholders. Before I dive in, as always a quick reminder and a few housekeeping items. Both NASDAQ and Process have reported their results today. NASDAQ's results reflect that of Process almost entirely.
For that reason, we'll be focusing on process numbers. We report revenue and trading profit on an economic increase basis, meaning they include our proportional share of the results of our associates in joint ventures. The results of our associates, Pansink, Malru, Delivery Hero, Swiggy and others are reported on a 3 month lag basis. This is particularly important when considering trends due to COVID-nineteen. Importantly, free cash flow is a consolidated number and for associates and joint ventures, Pony captures the dividends they pay us.
And finally, as I look through the deck, I will focus on local currency growth, excluding the impact of M and A. So let's get going and if you could please turn to Slide 16. Overall, we read it the song well and ended the first half year with a strong financial performance and improvement across all financial metrics. Revenue for the period was $12,700,000,000 growing 32% year on year. E commerce revenues grew even faster at 51% year on year, supported by food delivery, retail and payments and FinTech and our EdTech businesses.
Trading profit grew 43% driven by improved scale and unit economics in food delivery and by our e tail business. Our share for Tencent's revenue and training profit grew 28% 32% respectively. This reflects China's early recovery from the pandemic and the strength and resilience of Tencent's business model. We remain very excited about the company's future prospects. Core headline earnings were $3,200,000,000 growing 29% year over year driven by improved profitability from our e commerce units and Tencent.
Finally, free cash flow improved meaningfully year over year with the group generating $370,000,000 in free cash flow, which is an substantial improvement. We ended the period with a strong balance sheet with almost $10,000,000,000 in gross cash and net cash of approximately $4,500,000,000 we have the financial flexibility to both invest across our asset portfolio and in our stock. So turning to Slide 17, you'll see that e commerce revenue grew significantly. Growth accelerated 23 percentage points year on year. Food delivery, retail and the core payments business all did well.
They executed well in difficult times to capture the opportunity created by the acceleration in consumer Internet growth, which Bob covered well earlier. Classified revenue declined as its business model is most affected by the pandemic. Our revenues declined on par with our peers in the Q1. However, as restrictions were relaxed in many of our markets by the Q2, we continue to grow comfortably ahead of our peers. If you turn to Slide 18, you'll see revenue growth flows nicely to the bottom line, reflecting improving unit economics of scale.
Trading losses improved by 26% from a loss of $416,000,000 to a loss of $316,000,000 a $100,000,000 improvement. That's a healthy 10 percentage point gain in trading margin. Food delivery was the standout for the period with margins improving 61%, benefiting from scale and lower customer acquisition costs. Detailed reported a trading profit of $20,000,000 compared to a $50,000,000 loss in the prior period, which is just outstanding. It's incredible to see how quickly the team organized with SACI's dramatic increase in demand for services.
They've also taken considerable action to support government pandemic efforts in their home markets as well as enabling new third party sellers looking for a way to access customers online. COVID-nineteen negatively impacted classifieds trading profit.
However, we've seen
a good rise in classifieds trading profit. However, we've seen a good rise in profitability in recent months. In payments, we've stepped up investment in longer term growth initiatives. So let's get into the financial performance of our segment starting with Classifieds on Slide 19. Our Classified segment was the most impacted by lockdown restrictions.
The Q1 of the period brought a full brand in key markets, but the business recovered strongly and steadily in the Q2 as lockdown restrictions were relaxed. Most recently, however, as COVID-nineteen cases have risen in some of the classified markets, we remain somewhat cautious on our outlook. In our traditional classified business, revenues grew 4% for the 6 months. Classified revenues excluding transaction revenues dropped 8% in the Q1 as traffic volumes dropped when markets went into lockdown. We supported our partners with targeted initiatives like extended listing duration and discounted listing fees to help them through the crisis.
These initiatives had a short term negative impact on revenues and profits. We also invested behind innovation and find new ways for people to create on our platforms. We've invested in new services like payments, shipping capabilities, virtual real estate and car inspections. We're also investing in enhancing the user experience and engagement. The 2nd quarter saw a steady recovery in revenue as support measures were phased out.
Core classifieds revenue grew 16% in the 2nd quarter AVEETO performed well in a difficult environment, growing 10% year on year in the first half. Following the revenue decline of 4% in the first quarter, the business grew strongly by 23% in the second quarter. We are using the opportunity to invest incrementally to gain market share, particularly in key verticals. This has lower margins initially that enables Aviso to drive record volumes of user and platform activity and gain market share. We'll continue with this as long as it delivers sustainable long term gains.
Poland, the Ukraine and Romania continue to gain momentum building on a healthy ecosystem. Despite the impact of COVID-nineteen, trading margins remained strong at 44%. Poland has also recovered well and continues to make good progress. We see opportunity to increase investments in our key verticals and in Pay and Ship capabilities, which is beginning to show real traction. You will see a pickup in investment in the second half of the year.
Olinx Brazil was hard hit by the pandemic restrictions and consequently recorded a revenue decline of 5%. However, as Bob mentioned earlier, growth has now resumed. Margins have improved to 20%. The recent acquisition of GrupoZap places us firmly in the number one spot in the underpenetrated online real estate classified segment. Turning now to our transaction business, which was initially hit hard by the pandemic.
During lockdown restrictions in the Q1, the majority of our inspection and retail transaction centers closed resulting in a 52% drop in the 1st quarter revenue. As lockdown restrictions lifted, transaction centers began to open and return towards pre COVID levels. The 2nd quarter ended with approximately 90% of the transaction centers open again and revenue returning to prior levels. Losses for the transaction centers increased in aggregate during the period, reflecting our acquisition of a controlling stake in Frontier Car Group. This means that we now include 100% of the losses from Frontier Car Group compared to only 36% last year.
I've called out a couple of times on the slide that as you think about the remainder of the year, you will see an increase in our marketing and other investments. This is consistent with prior year trends, but it's also driven by investments to build out our ecosystem. With the actions we are taking in the classified segment and the encouraging trends we are seeing, we remain confident that our business will continue to do well over the long term. So moving to food delivery on Slide 20, while the impact of the pandemic differed by region, the segment was a real bright spot in the period, buoyed by our response of consumer trends that we believe will significantly benefit the industry long term. We provided much needed respite to tens of thousands of restaurants who were able to keep their doors open.
We worked hard to keep our employees and delivery partners safe, providing additional employment opportunities at a critical time for so many. For the period, our food delivery segment doubled revenues to $610,000,000 and reduced losses by almost $100,000,000 to 187,000,000 dollars an exceptional performance. Ifood continued the momentum it had built prior to the pandemic with order frequency, order value and the key KPIs hitting record levels. This drove impressive revenue growth of 2 34%. Our decision to invest and build differentiated capabilities is at the core of the strong performance.
Delivery Hero also continued to execute incredibly well. For the 6 months ended 30 June 2020, order volume declined 93% to $519,000,000 with revenues growing 87% year over year. We are also encouraged by Delivery Hero's continued investment to build out a broader service offering. Previous performance was different as we have previously told you. Early in the crisis food delivery in India was hit hard by the lockdown.
Since then, however, the maintenance pick up and the trends are positive. The business has steadily recovered and is nearing pre COVID levels. As Swiggy is reported on the 3 month lag, we expect the impact of COVID to carry through into the second half of the year. Our share of Swiggy's revenues grew 17% over the period. Trading loss contribution for the period improved meaningfully.
Management used the breathing space that the low activity created to look at the entire business and take action that positions them well for the future and to drive growth. Looking forward, it's important to note that as restrictions ease and in restaurant dining normalizes, it will be difficult for the food segment to attain the rates of growth we have seen over the past 6 months. So while we expect revenue to continue to grow strongly, the pace of growth will de decelerate somewhat. Consumer acquisition investment will also increase as we continue to expand our ecosystem. Moving on to payments and FinTech on Slide 21.
The segment performance like food delivery differed by region, but was on balance another bright spot. Once again, we mobilized fast to capture an acceleration of consumer trends and managed to offset the sizable drop in verticals such as travel that had been hard hit by the pandemic. Revenues grew 29% to $252,000,000 driven by transaction payment value growth of 37% with over 700,000,000 transactions processed. Europe and Latin America making up our GPO business performed very well. Businesses strongly throughout the pandemic with revenue strongly up in the Q1 and remaining robust at 44% in the Q2, despite the lifting of lockdown restrictions in many markets.
I would expect growth rates to take off in the second half, but will remain strong. In India, where we are number 1 in terms of online payments volume, we had a tough start to the year. Revenue fell 10% in the Q1 as activity levels dropped, particularly in travel. As restrictions eased and e commerce in India resumed its rapid growth, the business recovered sharply and grew revenue 21% year on year in the quarter. Overall, the core payments business improved margins by 7%.
As you know, in recent years, we've been focused on broadening our fintech ecosystem in core markets such as India. In the full year 2020, we stepped up our investment to a controlling stake in PaySense, a fast growing online consumer lending business. This is what drove the larger year on year losses for the segment. As you would expect during the last 6 months, we've been cautious following the pandemic's negative impact on the Indian economy and have held back on new loans. We'll await more substantial signs of recovery before we again drive growth as we move forward.
Turning now to Slide 22, where we unpack the increased contribution to central cash flows from our profitable e commerce businesses. This is an important slide and demonstrates the cash flow generative ability of the group. Over 60% of our e commerce revenue now comes from profitable businesses. This compares to 54% last year. Consolidated trading profit from these businesses increased 20% year over year, driven by e tail and payments and fintech.
This was partially offset by a lower contribution from classifieds due to the effects of the pandemic. We expect classifieds to rapidly recover, boosting overall profit growth. Our share of Kenshin's dividend grew 21% to a sizeable $468,000,000 This continues to be a significant underpin of our increased financial flexibility. Now let's dig deeper into the cash flows on Slide 23. Free cash flow for the 6 months was an inflow of $370,000,000 a considerable improvement compared to the $14,000,000 in the prior year.
The progress was driven by e commerce due to lower losses from food delivery, excellent working capital management, particularly in our e commerce segment and $81,000,000 increase in pension dividends. Unlike last year, this year we did not have one time transaction costs for the process listing. Moving to the balance sheet on Slide 24. Over the years, the group has worked hard to increase financial flexibility. We've built a portfolio of e commerce assets with significant cash flow generating capabilities.
We increased leverage and the average interest rate of our debt has declined steadily and we remain good allocators of capital. Our balance sheet remains healthy with $4,500,000,000 of net cash and undrawn $2,500,000,000 revolver and the ability to raise additional debt. We remain committed to the investment rates rating. This increased financial flexibility allows us to execute on M and A to enhance our core segments and invest in our stock. Before I close, I will touch on the buyback we will be launching shortly.
Bob has covered this extensively, but I wanted to cover some of the accounting aspects. Firstly, in the books of Prosus, the Prosus shares that are bought will be canceled. Prosus will account for the NASDAQ purchase shares as an investment. Investment will be mark to market at every reporting period and gains and losses will be taken through other comprehensive income in the process results. Secondly, for NASPAS, share purchase by Prosus will sit in treasury shares.
NASBAS will exclude the shares owned by Prosus in its per share ratios. We will execute the program in an optimal manner, focusing on creating value for you, our shareholders. I also want to reiterate what Bob said. This repurchase program should not be viewed in isolation and is not the solution to reducing the discount. Management and the Board remain committed to reducing the consolidated discount through a variety of means and we will discuss them with you in more detail as and when they come.
Finally, just a quick housekeeping item. As you know, we published a lot more detail on our website to help you understand the operations and to model the numbers. We have for the first time added an Excel KPI sheet. I know many of you have asked for this in the past and I hope you find it useful. So in closing, I'm very pleased with our results and our position as we enter the second half of the year.
This has clearly been a very challenging time. As a group, we have met these challenges head on and have exceeded our expectations. As I've said, we're operating today with a great deal more certainty than we had in March. We will continue on as we have operating with discipline with a close eye on our business and ready to take strategic action where necessary. The results are the strongest possible endorsement of the significant long term value creation potential of the high growth markets, business models and segments we're invested in.
This is a very important takeaway for you as shareholders. With that, I'll hand the call back over to Bob to close this off.
Thanks, guys. Before we have the questions, I'd like to summarize our key priorities when we look towards 2021 and beyond. So that's Slide 26. So first, the fundamentals of our business are very strong. And each business is actually well positioned to benefit from the operation of secular growth brands that's driving driving the Internet space.
The second is around that we remain focused on driving profitability and cash generation in our more established e commerce segments, while we are investing for growth in food delivery, in classifieds transactions, in credit and in FX. 3rd, our financial flexibility has improved and is enabling investment across our operations and our stock. 4th, we will continue to read through and improve the competitiveness of our platform by investing in products and technology and talents and by reinforcing our AI capabilities. And 5th, there is a significant amount of opportunity to create value to the growth of our business and by narrowing the discount to our net asset value, and we remain committed to both. So with that, I want to thank you for your time so far, and let's open the line for questions.
Thank you very much, sir. My apologies. Our first question is from Lisa Yang of Goldman Sachs. Please go ahead.
Good afternoon and thank you very I have 3, if possible. The first one is on Food Delivery, where clearly the performance has been really impressive in H1. And you mentioned the improvement in profitability was driven by better operating leverage and lower marketing costs. So I'm just wondering like how do you think that profitability improving profitability trend is sustainable, especially as the environment normalizes into H2? And I know you don't give guidance, but do you think we're now in a position to potentially breakeven sooner in that core food delivery business, let's say, on a 1 to 2 year view?
That's the first question. The second one is on EMAG. I mean, the business has turned profitable, as you said, and since you can benefit from COVID. So just given your comments about tech valuations being high, I'm just wondering whether you could take advantage of that situation and maybe crystallize your value in the of EMAC in the short term? That's the second one.
And third question is actually on the buyback. I mean, my understanding is that it seems like there's been a bit a change in tone regarding the buyback. So I'm just wondering, did you see the recent buyback announcement more as a one off? Or do you think it could be a more recurring part of your capital future capital allocation policy? And how do you rank that versus, for instance, deploying cash flow M and A or cash to invest organically in the future?
Thank you very much.
Thanks, Lisa. Thanks for your three questions. On the first one, maybe I'll start and I'll hand over to Larry to add color from more percentage to operation. I can also speak briefly to EMAG on buybacks. I will start and then Basil wants to continue with which NNPCs do so.
So on food delivery, indeed, we've seen results improve, and it has helped profitability because of, as you say, leverage and reduced marketing costs. When it will sustain, I think based on what I've seen so far, I think a lot of it will sustain. Because what we've seen is that customer groups who previously hadn't tried food delivery have now tried it or people have been using food delivery for different food occasions that they like. And the net promoter stores actually across the businesses are extremely strong. People are therefore having a great experience when they're using these products.
And if we look under the hood, I don't think a there's no reason to believe while that sort of trial and sort of usage in different occasions is something that would go away completely. So it's hard to forecast exactly what the world will look like, but it looks that a big part of the shift that we have seen is a structural shift that we expect will actually sustain. But maybe, Larry, you want to comment based on your observations.
Yes, I think you covered most of it, Bob. The only point that I would add is, we have a pretty good lens on the consumer cohorts. And so what we can see and we're far enough into the pandemic where many of the pandemic age cohorts are more than 6 months old. So we can see how they're performing versus historical cohorts. And this is, I'm speaking in very broad brushes across over 40 markets that we observe.
Broadly speaking, the cohorts look as good or better as the cohorts sort of pre COVID. So it speaks to what Bob mentioned, just the quality of users that have been brought in, remain strong. And if anything, it's giving us an advanced view on the future of the sector and further growth opportunities in adjacent categories. So it's the consumer quality is quite high.
And the second part of your question like does this change sort of our views on breakeven? Well, we don't give guidance, but we've seen indeed the profitability part of the businesses be significantly improved based on what has happened during COVID. It also has frankly, given us confidence to invest further. So I think it's been generally a very positive story. If I move on to EMAG, EMAG is an outstanding asset and it has a very clear leadership position in Romania and a number of other Eastern European countries and it has excellent growth as well.
And actually, one of the things that really excited me about EMAC is that how they build that initial position in e tail and they started very much as a first party retailer, but have built a great ecosystem where they empower other sellers. They've also really improved their offering by going into Lockmile Logistics. They're going into food delivery. They are creating a great loyalty program. So I would say, even though the numbers look incredibly impressive, I would say the best is yet to come, right?
There's really clear strategic runway and there are no current plans to de list it. I think actually it is a tremendous growth story from here as well. Then on the buyback, I think your question was, is there should we see it as a one off or a continued? I think the most important thing on the buyback is the rationale behind it, right? The rationale is that we have the financial ability to continue investing in our core assets, but also make use of this phenomenon where I think we our assets are because of the discount price there, they're cheaply.
So that in itself, that philosophy will hold for the future. With exact position we will be in, it's hard to forecast that position, okay, if we have the capital to invest in our business and to buy back shares at a good discount to net asset value that will make sense at any point in time. Eduardo, do you want to add to that?
Doug, I think you hit the nail on the head. We've got $5,000,000,000 to deploy. That's going to take some time. Once we've done that, so we can see where we're at. And then we'll make the capital allocation decisions accordingly.
The focus now is on growing the business and improving financial flexibility and giving ourselves the room to be able to deploy across multiple capital allocation opportunities. So that's what we focused on.
Okay. That's very helpful. Thank you.
Thank you. The next question is from Will Packer of Exane BNP. Please go ahead.
Hi, there. Thanks a lot for taking my questions. I had a couple of topics I wanted to cover. Firstly, there's been a lot of news flow on Chinese Internet regulation, but there was one particular aspect I hoped you could comment on. Some investors are concerned on the comments in the press that VIE structures may be in focus.
Are you concerned? Or in fact, could it be a good thing that these structures are more regulated? And then the second topic I wanted to go into was around online car dealing. We're seeing lots of capital in the U. S, U.
K. And elsewhere invested in the online car dealing opportunity. At Frontier Car Group, you have a very strong position in C2B in many interesting markets and a nascent B2C position. How aggressively are you planning to roll out your B2C online car dealing offering? And what are the challenges in the markets you operate because your sort of geographic exposure is a little bit different?
Thank you.
Okay. Let me take that once Bob returns. Well, yes, thanks very much for your question. As you rightly pointed out, there's been a lot commentary in the press recently in relations, particularly in the context of the antitrust draft regs that came out. I think maybe just to comment on that, I think there's been somewhat of a misunderstanding in relation to many of these press reports.
The inclusion of VIE under the SAMR regulations that came out was really reviewed as a ball from an avoidance of doubts perspective. Just to say that these new regs regarding antitrust sort of include all internet companies. And within that grouping, course, should be those Internet companies that operate under VIE structures. So there's there were some reports and some press reports that VIEs would have to obtain special approvals and the like. And it's really nothing of the kind that is rather erroneous reporting in that respect.
Insofar as VIE is concerned overall, I mean, as you well aware, the VIEs have been around for a long time. I mean, it's over 20 years right now. They're very widely used, and they have worked well during that time. It's fully understood by the Chinese authorities. And as you know, any time there is a listing that is required, as an example, the approvals of the authorities and the Chinese regulatory authorities are required for that.
So they've worked well during this time and would see no reason for this to change.
Yes, I'm back. And maybe Martin, if you mind speaking to the online car dealer opportunity and of the car group business?
Yes. Thank you for your question, Will. So you're right that we essentially at both the C2B, we buy cars from consumers, sell to dealers and B2C, we facilitate offloading of dealer inventory towards consumers already under our umbrella and both have their merit. What we're doing now is on top of that build and what we then call a C2B2C business where we manage the entire value chain from a consumer willing to sell a car to us. And then light refurbishment, we sell the car on to another consumer preferably with a suite of supporting products like finance, insurance, title deed transfer, warranty and so on.
And the reason we do it is that's what consumers want. They fundamentally want more transparency, trust and some convenience in the process. And it gives us access to new revenue and profit pools. And yes, this part of the business is still fairly nascent. It's most outbound in Chile, but we're holding out what works to more scalable markets like India.
With regards to the main challenges there, they're mostly executional. We've no doubt that this is something consumers want, strong, let's say, mirror companies in form of quasi and Carvana to that this business model has lots of runway. But there's a number of things we need to do to build that infrastructure both in software and in on the ground presence and that takes some time and that's why we're doing that diligently and to make sure we allocate our capital efficiently.
Thanks for the color, Martin. Appreciate it.
Thank you. The next question is from Ravi Jain of HSBC. Please go ahead.
Hi, good morning. I had 2 quick ones. The first one is just overall when I look at the capital allocation and the pace of investments, now the size of your NAV is probably north of $250,000,000,000 And when I look at the total investments on an average in a year is maybe somewhere between $2,000,000,000 to $3,000,000,000 Do you think it makes sense or do you consider maybe increasing the pace of these investments, maybe via more transactions or higher ticket to kind of maybe move the needle more every year? And the second one is a follow-up to an earlier question where if the valuation is pretty attractive today generally in the public markets and it's clearly not reflected in your stock, do you consider maybe even listing assets rather than even selling but listing it like for example, EMAG, Avito or potentially even OLX? Thank you.
Yes. Thank you, Ravi. I will give you an answer, and if Vas wants to add to it, more than welcome.
So when it
comes to increasing the phase of investment, I think it's really important to take a step back there. And we have periods of funds when we've invested more, and we've had periods of funds when we invested less. I think actually the essential part of when we evaluate investments is that we think they have to make strategic sense. And we want to make absolutely sure that we can deliver greatly to our shareholders. And that's depending on what you then get into the pipeline, that is really what decides whether we invest or not.
So I think if you would say we want to substantially increase the pace of investment, we cannot let go of strategic framework in which we need to take. It needs to be something that we understand, believe in, create synergies and we need to deliver good for our shareholders because otherwise we are investing and creating a business that we don't want to create. So could you see us increase sales yet if we run into the right opportunities with a great return profile that enhance the business we have. But we're not going to spend more money for the sake of spending money fast. And I think other people have done that in the recent past, and they are probably not necessarily looking back at it with a great sense of pride.
The second question on listing assets, I think that's a fair point. I think we have actually, over the years, listed many assets that Steve has invested in and I think that is definitely sort of an arrow in our quiver that we will deploy when we take the time that's right. But again, I think the most important thing for us is if you do that, and we want to crystallize value and we think that's the best option for a certain business, not to react to the market. That would be my view that you want to add.
Only one thing, Bob. So we also have some fantastic companies in some really big markets. And there's an opportunity to plug on to what those businesses do and build the ecosystems. And we've demonstrated that we can build great businesses that grow fast and become profitable. So we should be very comfortable deploying capital organically.
And given that we're still in the very early stages of the segments we're in and the sizable markets we're in, those are going to create meaningful value. Bob told you earlier, we've tripled capital invested from SEK 13,000,000,000 to SEK 30,000,000,000 is no reason why we can't keep doing that. So with organic investment too.
Thank you, sir. The next question is from Cesar Tiron of Bank of America. Please go ahead.
Yes. Hi. Thanks, everyone. Thanks for
the call and the opportunity to ask questions. I have three questions. Sorry about that. The first one would be on if you can give some examples of operational changes you've made during COVID. So we all have seen the tailwinds or the headwinds faced by these different businesses.
But just wanted to ask if there's any specific changes you have made to these businesses over the past 6 months, which would allow them to set them up for faster growth when these COVID tailwinds end or for classifieds maybe to allow them for higher profitability when the headwinds end? And then I think the next question would be on Online Education. So you've been investing quite significantly in the past year and increased a little bit your disclosure on these assets. So there my question would be to understand what prevents you to make it officially one of your verticals and if there's scope for consolidations among these assets. And then finally, last question on iFood.
I think this is the 2nd time in a row where revenue growth was ahead of GMV. So I suspect that last time this is really driven by subsidies which are decreasing. Can you please discuss the dynamics there and whether there is scope for the subsidies to decrease without necessarily impacting GMV growth going forward? Thank you so much.
Yes. Thanks, Cesar. And maybe I can start on the last one because you have relatively simple answer. Maybe, Larry, if you you can talk maybe about consolidation and FX. And then I think there are several examples of changes to the business and that anybody who wants to chime in can be.
So I have certainly few examples. I think the main reason for the revenue going faster than GMP in HIFU is actually the shift from 3P to 1P. That's really the story there. Because you see the 1P percentage go up quite quickly, and that drives revenue much, much faster than it drives GMV. That's actually the effect you see there.
So maybe, Larry, do you want to say a little bit about consolidation in FX? I know you speak out consoligently about that.
Yes, I can't vouch for the eloquence of the answer. I think it will be pretty straightforward though. I think with EdTech, it's a and it's a multifaceted sector. So I don't want to paint with too broad of a brush. But generically speaking, we have a lot of companies that are really coming of age as a result of the pandemic and bringing demand forward by years.
And I think that gets a lot of the companies and investors in the space excited about what the future holds. And as part of that, I think consolidation is just natural. And we're seeing more and more investment activity alongside the consumer activity in the last couple of months. And as
is true of
most sectors, consolidation will be pursued when it makes sense. I'm certainly seeing more activity there.
Yes. And the other part of your question there on FX there is like what prevents us from developing a business segment? I think in terms of the investment piece, it's become clearer. We're deploying more capital over time. I think we will transition it
into a segment. We're working
through the details on when that is the right travel. Then on specific examples of changes in the market, I would say there is quite a few examples that come to my mind. For example, I mean, Mark, you maybe can talk to Churchill, inspections of cars. I think in food delivery, I think we've seen a lot more sort of partnership with restaurants, integration with restaurant systems, because when we are the only customer, with when you are the only customer, but the main source of customers of restaurants, I think if you create a more sort of natural, sort of partnership that is led to further integrations that Martin, Larry, Laurent, feel free to chime in how you see structural change in the business that will help you going forward?
Yes. Shall I start, Bob? So thank you for pointing that out. And indeed, there has been a number of, let's say, adjustments, I would say, to product priorities during COVID. It was all geared towards meeting new or changed customer requirements quite obviously.
So people could not leave their homes. So we made sure they could order on OLX or AVPO from the couch and organized for last mile delivery where that was not yet possible such as in Russia. We also allowed people to virtually see houses they might want to buy or rent. So software to enable that was basically either created or given more priority. Both Bob and Basil had referred to the impact of social distancing on the ability to operate physical car inspection centers at the trough, very few were still allowed to be open.
Now they're back up to a large degree, but capacity is still somewhat limited due to all the health and safety measures. That's why we put particular emphasis on alternative ways to evaluate the value and the condition of cars we purchased to home inspectors, to self inspection and so on. And I think that's positive. I think ultimately, anything that makes the business more efficient and more customer centric is a good thing in the long run. And in the meantime, we were also prudent on hiring, on marketing and so on, which gave us some profitability benefits in the short term.
But I expect, as Bas already alluded to, to reverse that when if and when opportunities arise to invest again behind growth opportunities. But yes, the impact of accelerated innovation and customer centricity, I think, is a positive one already now and also in the future.
And I guess I'm happy to go next quickly on food. So I think in general, our teams responded very quickly to address safety and business sustainability. That was early stages of the pandemic and that allowed them to shift once they sort of got a read of the landscape to shift towards operational transformation. And a handful of examples that I can call out quickly, In some examples, it would mean moving more quickly towards online transactions, removing cash increasingly from the transactions, be the opening up of new kinds of order engagements. So we saw our businesses move towards restaurant takeout versus formal delivery in some cases.
And the last one I'll point out is you have these businesses especially as they skew towards 1st party that have an unbelievable reach and driver network. And you can use that infrastructure and those consumer relationships and high NPS to open up new sectors that might be in demand as a result of the pandemic. I think the one that's most prominent in most folks' minds would be things like grocery. So again, get the situation under control and then leverage that reach and operational infrastructure to do new things?
Yes. I think Roche is a great example, Larry. But maybe in the interest of countries are, those are good examples, and I suggest we move on to give someone a chance to answer questions as well.
Thank you, sir. The next question is from John Kim of UBS. Please go ahead.
Hi, everybody. Congrats on a good set of results. Two questions, please. Last time around the listing of PROSYS, call it a year plus ago, I think the team intimated that there were certain restructurings or optimizations that team Process wanted to engage in before potentially moving down between below a 70% ownership level for Naspers. Question on the progress of that kind of restructuring or reorganization, is that largely done?
And then if I could ask Larry and Bob to speak to extension into grocery, how we should think about that? Do you see that as a logical extension of the retail platform or are the margins a bit too competitive?
Thanks.
Thanks, John, for both questions. I think, Basil, I'll ask you to talk a little bit around the sort of the follow on steps on provisions. I know you spent a lot of your waiting hours on that. On grocery, I think you talked about it for an hour, and Larry will say more sensible things. But I think if you have the infrastructure to deliver in urban areas from many to many locations in a time critical way with a half an hour delivery window, that is an unbelievable asset to leverage into further user needs.
That will be my short answer to how I think about growth rate. Larry, maybe you want to add?
Yes. I think it's John asked the question as an extension of retail. I think the starting point matters. So it's obviously from a top down perspective, grocery is interesting, but really the bottoms up view matters. Bob, to your point, what's our starting point?
Do we just have consumer reach? Do we have a central warehouse? Do we have a driver network? And depending on our starting point and also what the consumer needs are, different models might make sense, at a more convenience model, a marketplace, a central warehouse kind of model. So I think from at least from my perspective, we look at it in both ways.
Top down, is it compelling in a given situation? And then do we have a right to play? And what's the right approach to play?
Then going to your first question. So look, as we went into the pandemic, a couple of things happened. Our business started to recover fast, internet migration started to go up and we meaningfully outperformed the JSE and I saw what was coming. I saw that we were going to rapidly add to our market cap and that and to our waiting. So we moved very quickly.
We pulled the team together and we started working hard and that works continued. We want to be very, very considerate here. So we've looked at many options. We don't want to exclude any of them. And we've had we have our own ideas, we've heard ideas and we've been fundamental work on all of those.
We are honing in on a couple that are interesting, but they require more work. It's not a simple thing. It's not just about tax. There's is 2 sets of shareholders. There is regulation.
There is a whole bunch of other things that need to come into play. And what I want everyone to take back from this is we're working as hard on this as we are on the business. It's important to us. It's important for our shareholders and we want to make progress. And when we're ready, we'll come back and tell you what that progress is.
Thank you. The next question is from Catherine O'Neill of Citibank. Please go ahead.
Great. Thank you very much. Well, three questions actually. 1 on the classifieds. I just wanted to see if there's been any impact from lockdown 2.0, I guess, in some markets or more restrictions in terms of whether you've had to offer any discounts again?
And given your commentary on investment plans in the second half, the classifieds, Should we expect the trading profit or loss to be a loss for the year? Second question is on Ifood and the merger in Colombia and what your plans there are in terms of how sort of aggressive you want to be given the position Rafi has in that market and whether you see any other opportunities within LatAm or whether your focus is mainly on Brazil and now Colombia as well? And then finally, on the payment side of things, I think you mentioned, obviously, credit lending has sort of stopped for the moment or the plans around credit lending have slowed, but you've been investing in growth initiatives in payments and stepped up those investments. Could you maybe talk about some of those other initiatives within the payments area that you've been investing in and you plan to invest further in?
Yes. Thanks, Catherine, for your questions. I think the questions naturally distribute themselves. So Martin, if you wouldn't mind talking about classifieds and Larry, I'm sure you can see the Columbia merger. And then Laurent, the payment question is yours.
Maybe Martin, do you want to go first?
Absolutely. Yes. So as you've been able to see, the trading profit in the first half was $12,000,000 considering the inclusion of the full FCG and the impact we initially saw from the lockdown, that's a result that we're very happy with. And yes, going forward, of course, we live in an uncertain world and it's largely crystal balling. But for now, we haven't yet had to give discounts to paying professionals on any of our large platforms.
We do see activity in jobs and in cars meaningfully impacted by the 2nd wave in many countries as car dealers hesitant to stock up and companies are even supply constrained and companies are hesitant to hire. So some uncertainty to remain, but overall, the trajectory of recovery has been very steep and that continues to this moment. What is important to note is that what we've always done is we would like to throw oil on fire. So when things work, we push ahead and do not hesitate to benefit from an opportunity to drive growth or gain market share, which we'll continue to do also in this second half. So especially in Russia and in Poland, we see those opportunities, which we'll continue to drive.
But then on the back of what I think will be much better economics than we saw a few months ago.
I'm happy to go next on LatAm. I think to your question, Catherine, I think Brazil is clearly in focus and we're excited about the potential of ifood in that market, but we're not blind to the broader LatAm opportunity. We're very excited about the opportunity for a combined entity between Ifood and Domicelios. As in most cases, consolidation makes sense, of course, pending regulatory review. But when we're on the other side of that, you'll see a business that has the largest footprint in Colombia with over 12,000 restaurants and operates in over 30 cities across the country.
And consistent with our other food delivery platforms, truly becomes a platform that we can use to not only build that own food delivery business, but other adjacent businesses on the back of it.
And regarding payments, it's Laurent here. So I can think of 3 big initiatives that we have going on at the moment. One is around the growth for the small and medium business segment in our business. Most of the growth that we've seen is coming from e commerce, but not just for large merchants, but also the growth purely on SMB accelerating their plans to sell online. So actually, we've invested quite a lot to automate all the onboarding of these SMBs, and this is true across all of our markets, from LATAM, Central Europe to India.
So that's 1, the growth of SMB. The second one is specifically to India. We serve 3 type of customers: merchants, of course, with our payment gateway consumers with our credit business and then banking partners. And about a year ago, we acquired a company called Webmo, which is now fully integrated into our business. And actually, we have invested in terms of money for the platform, but also people to actually accelerate the plans to serve the banks with our platform to actually process all the payments for them.
And we are in a position where we manage most of the card transactions in terms of security, which is an added value services for all the banking sector in India. So we believe that this will give us a very strong position actually to reinforce our positioning with the banks in the market. And the third one is actually regarding credit. What we have done there is effectively stop the issuance of personal loans to new customers because we didn't have a good read on the risk in the market. But actually, we have continued to serve our existing customers with our buy now pay later product, which is called LazyPay.
And actually, that product has continued to grow. We serve right now about 1,500,000 customers every month with a very high repeat rate of 90%. So actually, we've stopped the issuance of personnel loans, continue on BNPL and actually what the team has done is continue to innovate to bring new products like installments using the UPI platform. So when we are ready to go back to the market, we will actually add a new set of product to offer. So these are the 3 initiatives.
Thank you. Ladies and gentlemen, we have time for one more question. The question is from Ziyad Gussard of Nedbank. Please go ahead.
Hi, everyone. Thank you for the questions. Just two questions from my side, please. The first question is on pay and ship. If you could maybe give us a bit more color through the COVID crisis.
Has your strategic outlook for this particular product class changed, specifically in Central Eastern Europe and Russia? And what are your thoughts on pay and ship in the U. S. Mobile classifieds market? Do you see an opportunity there?
And then the second question is on Unline Foods. Given that you've scaled up your 1P business in Brazil, could you maybe give us a bit more color on what the contribution margins are for 1P versus 3P, specifically in the Brazilian market at this stage and how you see it evolving? Thank you.
Yes. Thanks, Diad. I think, Larry, that second question is firmly in your camp. I think the trends are generally quite positive. But Martin, maybe you want to talk us through your views on pricing for Pay and Ship and the outlook you have for the different markets?
Absolutely. So thanks, Iyad, for tabling that because Pay and Ship, as you point out, I think, has gained its strategic importance over the lockdown. As I pointed out earlier, it was always a solution for distance trade between cities when people had difficulties meeting up in person, but it has more widely spread over the lockdown for two reasons. 1 is that people want to order from the comfort of their own home and second, a lot of small businesses that had to close their physical store or were saw declining food traffic moved online and then we want the channels they can use. So we've invested significantly to improve the experience and the speed of delivery in the network, especially in Russia, where we already were active but extended, say, the service levels.
And we accelerated the rollout in Poland and in Brazil. And we pretty much continued what we had in which is a bit more mature in Ukraine and a few other places. And going forward, I think we'll do more of this. And I think that's one of the main one of the major, let's say, growth pillars under the especially the Eastern European side of the business. In the U.
S, I also think there is potential. We are minority in the offer of let go combination. So we're not driving on initiatives, but that is one of the things the team is looking at because believes or not, but even though companies have alternatives in U. S, they don't have elsewhere with Amazon and eBay and many other channels at their disposal. The strength of OfferUp now after induction of letgo is so significant that for many such SMEs, it's become a channel of force.
And similar to other markets, we want them to facilitate that with a pay and ship solution. And as we see results come in, we'll share them with you.
Yes. Sorry, I could just hop in on the, I could profitability. As Bob said,
the trends
are positive and it gives us a view into the future, in the COVID context. And we can see what food delivery looks like, especially on the 1st party side at further scale. No surprise to folks on this call is the business benefits from ongoing leverage as a predominantly logistics model. And what we can see not just for iFood, but I think globally that first party can be run profitably. And while on a percentage basis, it's hard to see how it will ever be as high as a third party marketplace in terms of percent profitability, but we can see contribution coming from the space.
We're seeing it now. And it's especially important as we can see that the future growth in the category will predominantly be 1P. So it's nice to see that the profitability that that side of the business can generate.
Thank you very much. Ladies and gentlemen, we have no further questions at the moment. I'd like to hand the call back to Mr. Van der Aech for final comments.
Yes. Thanks very much. And sorry, I think I already started closing call too early. But I wanted to thank everybody for many great questions asked. And I hope we share our excitement about these results, but actually more importantly about, I think, the potential and the growth for the businesses that we discussed for the time ahead.
I think there's a lot to look forward to, and we look forward to talking to you about it in about 6 months. So thanks very much, everybody.
Thank you very much, sir. Ladies and gentlemen, that then concludes this event and you may now disconnect.