Good day, ladies and gentlemen, and welcome to the Prosus and Naspers half-year results conference. All participants are currently on listen-only mode, and there will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please also note that this call is being recorded. I would now like to turn the conference over to Eoin Ryan. Please go ahead.
Thanks, Chris, and hello, everyone. Welcome to the first Prosus and Naspers interim earnings call. You can find our report on accompanying documents on the investor relations websites for both Prosus and Naspers. On the call with me today is our CEO, Bob van Dijk, and our Chief Financial Officer, Basil Sgourdos. Bob will give a quick strategic overview, and Basil will hit the financial highlights before we open the call for Q&A. To kick things off, I'll hand it over to Bob.
Thanks a lot, Eoin, and thanks, everyone, for joining us, and welcome to our 2019 half-year results call, which will cover what I think have been a very busy six months indeed. I'll be relatively brief with my remarks today as we plan to provide an in-depth look inside our business at the Capital Markets Day next week, and I would like to also make sure that we have ample room for Q&A today. The last six months were transformational for the group, and they reflect the work of many months of preparation. While we're keeping our focus on operations and driving continued solid results, we've also transformed the entire structure of the company into one which I believe will unlock substantial value over time. I'm very pleased with the progress that we've made and the ground that we've covered.
If I can take you to slide four, I will walk you through the highlights. We're very happy to report a solid first set of Prosus results. Revenue grew 20%, while trading profit and core headline earnings grew 7% and 10%, despite really stepping up our investment in food delivery. We saw strong execution across our three core segments. In Classifieds, we delivered excellent results, particularly from Russia, from Europe, Brazil, and India. Product and tech innovation is driving stronger user engagement that enables us to monetize better. Paying listers grew 22% year-on-year. Classifieds remains profitable overall and the traditional core increases margin, as Basil will cover in more detail. In Payments, transaction volumes increased 30% and reached almost $18 billion for the six months. India is now more than 50% of volumes and is growing really fast.
In Food Delivery, we've increased our investment substantially, and the early indications are very positive. iFood, Swiggy, and Delivery Hero are growing very strongly, are ahead of our expectations. In total, the number of our food orders increased 110% year-on-year, and GMV increased 81% year-on-year during the period. As you'll know, in September, we successfully listed Prosus on the Euronext Amsterdam. This is a significant step forward for the group, and it provides easy access for a larger and deeper pool of international tech investors in our attractive portfolio. It also begins the process that will allow us to unlock substantial value in both Naspers and Prosus over time. Finally, as an organization, we continue to get more fit.
We operate in an environment of continuous disruption, and a lot of that is driven by new capabilities in artificial intelligence and machine learning. During the period, we continued to invest in our capabilities in both areas across our entire group. If you'll join me on slide five, let's spend one more minute on the outcome of the Prosus listing in September, which will continue to unlock value for shareholders. The listing created the largest listed consumer internet company in Europe, comprising all our internet interests outside South Africa. Prosus is 74% owned by Naspers with a free float of 26%.
As Europe's largest listed consumer internet company by asset value, Prosus gives global internet investors direct access to our attractive portfolio of international internet assets, as well as a unique exposure to China, to India, and other high-growth markets, and to the global tech sector. At the time of the listing, value unlock was approximately EUR 16 billion to the reduction of discount to the combined net asset value of Prosus and Naspers. We have been included in a number of new indices, and we expect to continue to be added to more, starting with the AEX in December, and potentially further inclusion into the stocks indices in the new year. It's certainly been a volatile couple of months since we listed Prosus, so much of which was expected.
We recognize that the discount to the sum of our parts, while roughly down seven percentage points since the announcement of Prosus earlier this year, has widened over the last month. That said, it's never served the company or its investors particularly well to focus on the short term. I am really pleased with the value unlocked to date, and over the long term, I believe we will make significant additional progress. My team and I remain very committed to the continued reduction of the consolidated discount in Naspers and Prosus. We'll do this by two things. First and foremost, by building bigger and more valuable businesses across our core segments that will generate substantial and sustainable cash flow, and also by continuing to take financial and structural steps where sensible.
If we can turn to slide six, I am proud of the focus and execution that's exhibited by our operators during a period of significant noise and workflow. I think this is illustrated well. Operationally, our key segments are performing well. In Classifieds, revenue grew 48% all in, and 38% excluding the expansion into convenient transactions. In the core business, paying lists is through 22% year-on-year, our convenient transactions offering is growing very rapidly with tangible synergies with the core. Payments and fintech continue to exhibit strong growth. Volumes processed in the payments business reached $18 billion for the half year, up 30% year-on-year on the back of over 550 million transactions. Among PayU's major markets, we have a leading position in India, which is a very large growth opportunity given the significant tailwinds of increasing e-commerce penetration and the shift from cash to alternative digital payments.
Food delivery represents a massive opportunity. As I just mentioned, order and GMV growth remains very strong as we solidify our position and to grow the market. We will take you through all our businesses in much more detail at the Capital Markets Day next week. We can take you to slide seven that shows that we continue to invest across the business. We invested just under $400 million in M&A in the last six months. To further strengthen the payments business outside India and increase our footprint in growth markets, we acquired Red Dot Payment, which is Singapore's largest homegrown and trusted online payment solutions company. Also in payments, we acquired Wibmo, which both enhances our partnership with leading banks for security and mobile payments, as well as improving success rates on transactions.
In classifieds, we merged our operations in the Philippines, and we contributed an aggregate amount of cash of EUR 56 million for a 12% effective stake in Carousell. In ventures, we invested EUR 80 million in Meesho, which is a leading social commerce online marketplace in India. In the period, we also swapped our 43% stake in MakeMyTrip for a 5.6% stake in Ctrip. We've achieved an IRR of approximately 24% on the MakeMyTrip investment over its lifetime. More recently, in October, as you'll know, we announced an offer to acquire Just Eat in an all-cash deal, which is detailed on slide eight. We believe we've put together an attractive offer, but unfortunately, we've not been able to reach agreement with the board of Just Eat to secure a recommended offer. We've taken the offer to Just Eat shareholders.
As you may know, Just Eat is also currently subject to an offer for an all-share takeover by Takeaway.com. We believe our offer provides compelling and certain value and is a fair cash offer for a business that's been underperforming and requires substantially more investment than the market expects. We have already spoken to many of you, and we're hopeful that the merits of the proposal will be recognized by the Just Eat shareholders and that we can engage further with Just Eat's board to progress to a recommended offer. We released our offer document on the 11th of November, and that sets out our offer terms and the first closing date for the offer. We've lowered the acceptance condition from 90% to 75% to put it at parity with Takeaway.com's offer.
We expect to have a great degree of visibility on the outcome of this process by the end of December. It is very important to note that throughout this process, we will, as always, remain highly disciplined as our overriding objective is to create value for our shareholders by delivering excellent returns. I'll now hand over to Basil for the financial update.
Thanks, Bob. Hi, everyone, thanks for joining us today. As Bob mentioned, this has been a transformational six months for us. This is the first reporting period for the newly listed Prosus group. The Naspers results reflect that of Prosus almost entirely, as Naspers consolidates Prosus and adds the Media24 and Takealot numbers. For the reason explained above, we'll be focusing on the Prosus reported numbers. Before I dive in, following the listing of Prosus, there are now new investors listening in. I'll give you a quick reminder on how we report our numbers. First, revenue and trading profit are on an economic interest basis, meaning they include our proportional share of results of our associates and joint ventures. Second, we report our associates, Tencent, Mail.ru, and Delivery Hero, and others on a three-month lag basis.
Third, free cash flow, core headline earnings are both consolidated numbers. Finally, as I work through the deck, I will focus on organic growth. Organic growth rates measure growth in local currency, excluding the impact of M&A. Let's kick off with slide 10. We're happy to report a strong first set of Prosus results, representing progress for the group in line with our expectations. We saw continued strong growth from each of our core segments: classifieds, payments and fintech, and food delivery. Classifieds and the payments and fintech segments have reached profitability at their core. Revenue growth continued to flow nicely to the bottom line, even as these businesses invested in a number of strategic initiatives to drive future growth. Food delivery will continue to be the largest investment area for the group in the year ahead.
We're very pleased with and encouraged by the business' impressive order and top-line growth. Importantly, we see strong underlying unit economics as we achieve increased scale. Naspers revenue and trading profit grew 18% and 16%, respectively. Quarter two growth was significantly stronger than quarter one. Revenue accelerated by five percentage points and trading profit by 12 percentage points. Finally, the first half was another six months of improved cash flow from the core profitable businesses and yet another period with a strong balance sheet. We now have approximately EUR 9 billion in gross cash, and should we need it, more liquidity to realize our ambitions. On the right-hand side of the slide, you'll see the strong performance all around. We grew revenues 20%. Trading profit increased at a slower rate of 7%, entirely due to the significant step-up in investment in food delivery.
Core classifieds, payments and fintech, and E-tail accelerated their profitability. Tencent delivered a good performance. Free cash flow remained flat year-on-year when we exclude Prosus listing costs, despite the increased investment in food delivery. Core headline earnings increased 11% year-on-year, translating into EUR 1.05 per share. Turning to slide 11, we see encouraging progress across the segments as they are scaling well. E-commerce revenue growth remains a strong 28% year-on-year, with meaningful contributions across the portfolio. Revenue and e-commerce for the first half totaled EUR 1.9 billion. As was the case in FY 2019, the 28% growth is a faster growth than that which we saw in Tencent.
Classifieds revenue increased 38% year-over-year, as the business scales its convenient transaction models, which is extending our presence in the cars vertical and deepening our relationship with both our users and the car dealers on our platform. Payments and fintech continue to exhibit strong growth, particularly in India. In the second quarter, revenue growth accelerated three percentage points compared to the first quarter, driven by a better performance in India. India revenue growth accelerated from 29% in the first quarter to 39% in the second quarter. Food delivery grew gross revenues by 107% year-over-year, 69% after netting customer acquisition costs off. This is meaningful and a very encouraging acceleration. Most encouraging is that we are seeing clear signs of improved efficiency in how the businesses are acquiring new customers, reactivating lapsed users, and expanding into new cities.
If you will join me now on slide 12, you'll see that we had some nice momentum to round out this half year. Given that we reported quarter one results as part of the Prosus listing in September, we can give you additional insight on the quarterly progress of the core segments. We saw an acceleration in revenue growth in every line across the e-commerce portfolio in the second quarter, with e-commerce revenues growing nine percentage points faster than that of the first quarter. Let's get into the detail of the segments and let's start with classifieds on slide 13. You'll see on that slide that classifieds revenue increased a strong 38% year-on-year to EUR 587 million. Our business is evolving to best meet the rapidly changing consumer environment.
The most important development on the financials is our increased exposure to convenient transaction models, which deepen our market presence and enhance the consumer experience in the autos vertical. Due to the different models for revenue recognition, we've also improved disclosure by now showing you revenues and costs for the core classified business and the convenient transaction models separately. Let's start with the core. Revenue on the core classified business increased 22%, driven by Russia, Europe, and Brazil, with group paying listers also increasing 22% year-on-year. Avito continues its good momentum, increasing revenue 21% year-on-year. They also saw strong growth across the largest vertical of autos, with growth at 42% year-on-year. The Polish business once again reported a very strong top-line growth of 27%. Brazil also grew at 25% year-on-year.
Classifieds' convenient transactions revenue grew nearly fivefold compared to the previous year. Frontier Car Group, which was an associate in the previous period, is performing particularly well and driving the majority of the growth. We are optimistic about our investment in convenient transactions, which have tremendous synergies with core classifieds. You will have seen that we full control of the Frontier Car Group, which we will fully consolidate. Overall, classifieds delivered a trading profit of EUR 37 million versus EUR 42 million in the first half of full year 2019. The modest reduction in profitability was due entirely to the significant increased investment in these new convenient transaction models that are temporarily loss-making. There was also added cost in further building out global tech infrastructure, as seen at the end of full year 2019.
We continue to invest to build our tech backbone to provide world-class customer experience by leveraging large hubs of concentrated engineering talent. Investment has increased meaningfully year-over-year. This is becoming increasingly important as classifieds has evolved from a marketing-led to a tech-enabled strategy. Profits were also impacted by share-based payment expenses driven by growth in employees and some increases in the underlying valuations on the back of fast top-line growth and improved profitability. Stripping out the new cost for convenient transactions, you can see that the core classifieds profits improved by a strong 36% year-over-year from EUR 37 million to EUR 63 million, with trading margins rising from 12%-14%. We continue to expect strong growth year-over-year for the rest of the year. Remember that as in the past, the first half tends to be seasonally stronger than the second half.
This is largely due to the timing of marketing spend, which is skewed to the seasonally stronger second half of the year. Overall, we're very happy with the performance of the classified segment, which is well ahead of our plans. We believe the investment in convenient transactions, new products in our tech backbone will provide incremental benefits to grow and scale the business even further. Folks, let's move on to payments and fintech, which is on slide 14. You'll see there that PayU recorded another six months of good growth driven by its core payments business. Revenue growth of 20% was supported by stronger growth in the core payment processing business, which grew faster at 23%. That was partially offset by weaker results by some of the associates. Payment volumes reached a sizable $18 billion, representing growth of 30% on the back of over 550 million transactions processed.
India is still the fastest-growing market. It grew volumes 35% and it now accounts for 53% of volumes processed. As mentioned earlier, revenue growth in India was 39% for the second quarter. The online payment space is still nascent in India, and we see significant further opportunity there for PayU. It is uniquely positioned to benefit from the country's transitioning online from the traditional cash-on-delivery model. Providing cashless payments together with our continued focus on innovative solutions has enabled the business to continue strengthening its merchant offering. As I called out on the first quarter call, the weaker performance reported by associates was driven by Luno, which was impacted by Bitcoin volatility and CreditTech. We have since reduced our holding in CreditTech to about 12%, and we therefore no longer equity account it.
The core payments business was profitable, enabling us to continue investing and integrating acquisitions such as ZOOZ, which helps us better serve global merchants in various markets via a single API. This does, however, have a short-term impact on profitability. With our investments in ZOOZ and the acquisition of Red Dot and iyzico, and our drive to build a credit business in India, we expect growth in payments to pick up over time. On slide 15, I'd like to tell you more about the food delivery financial performance. Online food delivery revenue and order growth continue to grow rapidly, justifying our increased investment in this high-potential sector. In the period, all our online food delivery service assets continued their strong growth, resulting in GMV growth of 81%. Combined contributions from the portfolio of businesses saw reported segment revenues increasing 69% to EUR 306 million, with orders increasing 110%.
Reported revenues increased 69%. This rate was impacted by increased investment in customer acquisition costs, which are netted off against revenue under IFRS. Gross revenues before these discounts and other incentives grew by a much faster 107% year-on-year. In order to achieve these growth rates, we have stepped up investment to grow the market and our position within it. Our share of losses across the segment is EUR 283 million, and we expect significant additional spend in the second half of the year. We will go into this in a lot more detail at the Capital Markets Day next week, we are incrementally more confident with the unit economics of food, as well as our ability to scale it in an efficient manner.
It is important to note that from a cash flow perspective, trading losses in Delivery Hero and Swiggy do not impact cash flow, as losses incurred by equity accounted investments are funded by the capital already raised by these companies. iFood continues to outperform the targets we set. Driven by expansion of its product offering and logistics business, iFood grew GMV 92%, with order growth being an impressive 122% year-on-year. iFood is investing in first-party logistics, new cities, as well as building out cloud kitchens and other models that enable us to scale very quickly. On a per unit basis, iFood is realizing cost efficiencies as we scale and as we get better at optimizing. In India, Swiggy continues its impressive growth, with orders up 165% year-on-year and GMV up 134% year-on-year.
This is driven by its rapid expansion into new cities and rollout of cloud kitchens and private label food supply. Delivery Hero continues to also execute well. For its first six months ended 30 June 2019, Delivery Hero's GMV grew at 60% to EUR 3.2 billion, with order volumes climbing 61% to 269 million orders. Excluding the impact of Germany, sales revenues grew by an extremely strong 76% year-on-year. On slide 16, we unpack the increased contribution to central cash flows by our profitable internet businesses. This is an important slide and illustrates the cash flow generating ability of the group. On the right-hand side, we illustrate the improved e-commerce profitability, particularly in our classified segment. The aggregate of free cash inflows generated by internet units that are free cash flow positive increased 17% to EUR 573 million.
Tencent's increased dividends, of which our share was a sizable EUR 377 million, continues to be a significant underpin of our increased financial flexibility. On slide 17, we walk you through our free cash flow results. Free cash flow for the six months was an inflow of EUR 14 million compared to EUR 96 million in the prior year. The decrease was primarily due to EUR 82 million one-time transaction costs incurred in the respect of listing of Prosus. Excluding these costs, free cash flow was flat year-on-year, and that's despite the increased investment in food delivery. The investment in food was compensated from profits in classified and in payment, then, of course, the increased dividend from Tencent. Now moving to the balance sheet on Slide 18, you'll see that we have a strong balance sheet and the financial flexibility to continue to execute on M&A to enhance our core segments.
We have significant gross cash of almost EUR 8.6 billion and an undrawn EUR 2.5 billion revolver, and the ability to raise additional debt should we need it. We have said we plan to fund the acquisition of Just Eat principally from new debt, which whilst we remain investment grade, allows us to invest in other segments. As a reminder, we have one bond that will mature in July 2020, and we are confident we can refinance that at more attractive rates in the near term. We also have significant cash flows coming from profitable entities within the group. On slide 19, we provide additional perspectives on our balance sheet. With a cash cushion of just under EUR 9 billion and EUR 129 billion worth of listed assets, we have the financial flexibility to fund all our growth ambitions. We will continue with the same discipline that has driven the returns so far.
In closing, folks, I am very pleased with our first half year results and our position as we enter the second half of the year. All core segments made good progress against financial and strategic objectives. Our priorities for the rest of the year are driving profitability in our established e-commerce segments while accelerating investment to scale food delivery. We believe our financial progress will drive the growth of our core headline earnings into the future. Last, and most importantly, we will remain disciplined in allocating our capital. With these remarks, we will now open the call for Q&A.
Thank you very much, sir. Ladies and gentlemen, at this time, if you do wish to ask a question, please press star and then one on your touchtone phone. You will hear a confirmation tone that you have joined the queue. If you wish to remove yourself from the queue, please press star and then two. Again, if you wish to ask a question, please press star and then one. Our first question is from Will Packer of Exane. Please go ahead.
Hi, it's Will Packer from Exane BNP Paribas. Many thanks for taking my questions. Couple from me, please. Firstly, can you just talk us through the rationale of the buyout at FCG, and talk about some of the potential revenue synergies that could be achieved? How have things progressed, and where can they go with that asset? Secondly, India Classifieds looks a very competitive market. You talked to visitor growth of 30%. Could you just update us as to how things are progressing there, please? Thank you.
Sure. Well, Martin is here with us, so you'll hear it from the main man himself.
Thank you for your question. I'll give you the headline now, there will be much more detail at the Capital Markets Day next week. Essentially, FCG is a quite a unique company that has built out infrastructure in many different countries that will allow us to deepen our platform and build true transaction-oriented ecosystems in cars. Since making the initial investment, they have outperformed on all their plans. We wanted to step up and accelerate. That's the long and short of it. We hope that deal will close imminently, then we can invest more and build that out. One of the places we have done that is India. As you say, that is a very competitive market.
The overall feeling of India is still that there is an immense growth potential, considering the rapid inflow of new internet users. We are today the market leader, especially in cars. More than 70% of all used car trade in India happens over OLX. Now the question is, how can we adjust our products so that the hundreds of millions of new internet users also find OLX?
Thanks, Martin.
If I can add one point to that. I think one of the important, basic two sets of synergies here. One is if you look at the instant cash for car model, by far the biggest cost component is around lead generation. How do you find people who are interested in selling their vehicle? Well, as Martin said before, those are exactly the customers that the group already has. That drives a tremendous amount of synergy between the two groups. On the other side, we typically have also the largest demand side for used vehicles as well. When these vehicles need to be sold again, either by dealers or by others, actually, we can do that in a very efficient way. Those are the two main sources of synergies.
Thanks. That's really helpful. Can I just ask one quick follow-up? On food delivery, you've expressed a willingness to look at developed markets. In classifieds, you've previously invested in letgo. Should we think looking forward that developed market classifieds is a major potential use of capital, or would that be an incorrect interpretation? Thank you.
Maybe I can give you a general answer, and then Martin can maybe comment specifically on classifieds. As a result of our Prosus listing, nothing changes in the way we do business. There's no change in strategy. We've always been a growth company. We're focused on growth first and foremost, whether the growth exists in a growing market or in a more mature market. We've over time, if you follow us for more than a few years, you've seen that we've always looked for great business models that are run by great people, and they can be in earlier stage markets or in more developed markets. I think when you see us make a move like investing in letgo or pursuing an acquisition like Just Eat, it's because we think the business opportunity is huge, regardless of the stage of the markets.
Martin, maybe you want to add to that.
I think that's it. We saw the biggest growth opportunities historically outside Western Europe and North America. With Letgo, that was where we capitalized on quite a unique situation in the U.S., where the market is very mature, but classifieds is underdeveloped, and that's why we invested behind Letgo a few years back, starting a few years back. You'll continue to see us look for these growth opportunities. As Bob said, regardless whether they are in a developed or a developing world. I believe that the classifieds is transforming, as per Basil's comment, from marketing led to more product data and tech led, where you will see platforms deepen towards more transaction-based ecosystems, which might or might not provide new opportunities also in more developed markets.
Thank you very much.
Thank you. The next question is from Catherine O'Neill from Citi. Please go ahead.
Hi. On food delivery, there's been some industry commentary that suggests maybe we're seeing more rationality, especially from private funding or capital. Do you have a view on global consolidation and where we are in that process, and whether we could be heading towards market repair in some of the markets? Also on Just Eat, which I guess links to it. Is this more a sort of opportunistic chance that you've taken given the de-rating of that sector, or is it an asset you see as strategically valuable? The other question I had is on Avito or the draft law in Russia around foreign ownership. It may be that that draft law is being delayed. Could you just maybe talk about the position of Avito there and how you think about the risk?
Finally, I just wanted to get your view on potential for a buyback at Naspers and whether that's something that you would consider doing in the short term.
Yeah. Thank you for your questions. I'll start with the first two, and Larry, if you are on the line, maybe you can chime in. I'll speak to the SUR bill, then Basil Sgourdos can speak to buybacks. I think if you look at the global food space, what we see is essentially that the further growth opportunity is very significant. I think we're probably less than 5% of the way there into what food delivery can be at scale. We are pursuing that with our businesses. That's actually the core reason why we have increased our investment in the space in the last periods. We see a bigger opportunity that we are pursuing.
I think whether that will lead to global consolidation, I think that's hard to speculate about, but I think the opportunity is frankly very large everywhere in both early stage market, but also I think in more developed market, I think there's still very significant upside, where in many cases, businesses are still what I would call a generation 1 food delivery, which is just offering restaurants that have their existing delivery fleet. Actually, if you look at what generation 2 and 3 can provide with dedicated delivery fleets and innovation in private label cloud kitchens, et cetera, I think there's just a lot of upside from there. I think that actually is the same answer to the Just Eat question. I think we see that business traditionally has had a good development, but I think has lost growth, has lost tremendous market share.
We think with the right investments and the right partner, it can actually get back on that longer term trend of further opportunity.
Maybe Larry, if you're on the call, maybe you can add to these points. You're close to it.
No, I think you covered it well, Bob. I think the only thing I would add in the spirit of the discussion around consolidation is I think we're seeing it's increasingly hard for the distant number 3 and number 4 players to compete. The leadership positions tend to perform quite well, and that seems to be playing out, I think in the spirit of the question, in the private markets.
Thanks, Larry. I'll briefly talk to the SUR bill. I think the sponsor of the bill has publicly stated that the bill is going to be withdrawn. It might be reintroduced later. I think that is uncertain. I think our view is that e-commerce businesses such as Avito should not be covered by the kind of businesses that the bill is trying to address. For the time being, that bill seems to be off the table. Maybe I can ask Basil to comment on potential buybacks.
Thanks. Hi, Catherine, it's Basil here. I think Bob was very explicit in his comments when he went through his slides saying, "We've done this transaction, it's unlocked value, and we remain committed to taking further action to continue to unlock value," and that's what we're going to do. I don't want to speculate now when and what time, but I think it's definitely something that's well on the radar. We're working hard at it, and when we're ready, we'll come back. Buybacks is definitely one of those options.
Okay. Thank you. Just one more question, actually, sorry, on food delivery. In India, there's articles about that Amazon has entered the market, I think around Diwali, with a really low commission rate. We're also seeing signs of maybe Uber exiting. Could you talk about the market in India for food delivery, whether that's becoming more rational or whether there are signs of Amazon entering at all?
Larry, would you mind, you're closest to that, would you mind giving your views?
Yeah, happy to. I think we've seen Amazon periodically pop up in several markets, and I think the reality of the space is, as Bob teed up, it's in the very early stages. I think we'll see not just actual competitors competing harder, but there are potential entrants and we list Amazon among that set, in many markets, not just India. I think what gets us most excited is Swiggy's not just performance but potential. It's bigger in terms of volumes than the number 2 and number 3 players in the market. While there will be entrants over time, we're happy with how the team executes.
Okay. Thank you.
Thank you. The next question is from Andrew Ross of Barclays. Please go ahead.
Hi guys. I've just got one question, actually, to keep it quick. There's a slide on in the analyst booklet, I think it's number 24, that goes over how you guys define interest coverage, which I think is about six times at the moment. Maybe it's one for Basil, but I wondered how low you think you could push that interest coverage and still maintain your investment grade rating? I guess another way of asking my question is, how much debt do you think you could support right now, and still have an investment grade rating? Obviously that's before you did any other M&A. Thanks.
Andrew, as I was saying, I think we have plenty of financial flexibility as demonstrated by our ability to fund the Just Eat acquisition with principally debt. Is there room beyond that? Yes. I don't want to speculate, though, because I think there's a long way to go before we need to do that. We have, as I mentioned, gross cash of about $8.6 billion. We have an unutilized revolver. We're quite comfortable with our financial flexibility. Again, I think what we do and how much more we do involves a continued constructive engagement with the rating agencies, and we have a good relationship there.
Very helpful. Thank you.
Thank you. The next question is from Aditya Buddhavarapu of Goldman Sachs. Please go ahead.
Hi, it's actually Lisa Yang from Goldman Sachs. I have a few questions, please. Maybe the first one on payments. You gave us the figures for India, which is at almost 40%, and for 40, about 23. Just wondering if you can give us some color on the other markets. It looks like the growth is quite slow there. Just wondering why it's not growing faster or if there's any seasonality between the first half and the second half. That's the first question. The second one is on classifieds. Just wondering on Panamera, could you give us a bit of indication in terms of where you are in terms of migrating your different assets onto the backbone, and what impact or benefit have you seen so far from the assets that you moved onto this platform?
Maybe if you can share what are the longer-term benefits that you would expect. The third question is on food delivery. Obviously, your grocery is very impressive at over 100%, although you have a lot of discounting happening in the first half. Just wondering, given how the competitive landscape is evolving, both Brazil and India, how should we think about discounting into the second half in the coming years? Thank you.
Thanks a lot. I will speak to payments and ask Basil Sgourdos to chime in, and Martin obviously will cover Panamera, and Larry can chime in as well. I think on payments, we're seeing very strong growth in India. I think the underlying drivers there are just an e-commerce business that's growing, e-commerce environment that's growing fast. We have very strong market share and also the country's digitizing quite quickly. If you look at the rest of our portfolio, it's really a mixed story. There are a few places in the world where we're migrating our platforms, and that leads to a certain level of slowdown. That's particularly the case in Latin America, where we've done the major tech migration that typically lead to a setback. I would say Eastern Europe is growing well.
We've there seen our biggest customer was Allegro, which has scaled back a little bit, but actually the other markets have grown very strongly. I think it's a somewhat differentiated story with a lot of the core markets actually doing quite well.
Yeah. What I'd add is, of course, Central and Eastern Europe are far more developed markets. One needs to look at relative maturity, and we have very strong positions there, which then also drives improved margin and improved profitability. A big chunk of that profit growth that you're seeing in payments is actually coming out of that part of the world. Secondly, we did call out the investment in Red Dot, which is Southeast Asia, and iyzico, which is in Turkey, and those are going to be incrementally fast-growing opportunities. That will continue to drive growth over the broader portfolio.
Yeah. Thanks. Martin can talk about Panamera.
Sure. Yeah, thank you for that question. As some of you know, we've decided to consolidate our technology in OLX outside Europe, where historically we've had quite fragmented software development for customer propositions that were quite similar. In order to reduce duplication and to reap benefits of scale from pockets of excellence around the group, we decided to consolidate and converge platforms into a single one, which is now live in Africa, in Pakistan, India, Indonesia, Latin America since last week. We see this very much as a necessary condition to continue to innovate fast and realize true customer engagement in the future and act as a starting point for what we then call deeper platforms facilitating transactions everywhere.
From here on, development will continue, and I see lots of long-term benefits around quality of products, customer engagement, and the ability to innovate and adjust the platform to local needs.
Thanks, Martin. Maybe on food, I'll start, and Larry, maybe you can elaborate a bit more. I think there's been significant discounting in the market, particularly in India. I think what we've seen that we feel really good about is that our market share's either stable or increasing. I think in India, they're clearly increasing on the back of, I think also increased innovation and just solid execution beyond discounting. The thing that gives me a lot of confidence is the retention curves we see when we see customer acquisition and see what percentage of customers are still around after a year, it's still probably the healthiest customer retention that I've seen in any subsector of e-commerce. That's, I think, a key driver for our levels of confidence that we're doing marketing, but we're getting the right results for it.
Maybe, Larry, you want to add?
Yeah, no, I think we are seeing some signs of rationalization of discounting around the world, including Brazil and India, but as you tee up, the role of discounting and coupons remains the same, right? The sector is early and coupons, when executed well in discounting, they drive consumer trial, and our companies continue to show good discipline there. The cohorts, as you tee up, the consumer cohorts remain strong, tied to that discipline. We'll go into that more in Capital Markets Day next week.
Okay. Thank you. That's really helpful.
Thank you. The next question is from Charles Vomiranz of Avior Capital Markets. Please go ahead.
How is it, guys? Can you hear me well enough there?
Yeah, it's okay. You cracked up a little bit. Let's try it.
Sorry about that. Just while we're on that subject of food, Larry, I just want to get some color around Swiggy and the cloud kitchens. If you can give any type of color about how big that is. Obviously, it's still nascent at this stage. The second part is just on Swiggy, which you guys disclosed is now in about 500 cities. To where do you think that can get, and basically, would you say that most of the core city is already penetrated by now?
No, thanks a lot. Larry, would you mind taking those questions?
Yeah. I guess the first question on cloud kitchens, I think this is very much a local story. In the case of India, we've been, I guess, surprised in some ways by the lack of classic restaurants and the role that the cloud kitchens play for Swiggy is really not just introducing food delivery to the Indian consumer, but bringing a restaurant experience. We've been surprised and impressed by the payback of these kitchens. We see a lot of further potential there. I missed part of the second question, it was the number of cities for Swiggy. Is that correct?
Yeah. Swiggy's, I think we discussed, is 500 cities by now. Would you say that most of your core cities have already been penetrated? Effectively, to what extent do you think you can grow a base like that?
I think that's a very good question. Swiggy indeed is now in over 500 cities, and that's quite a dramatic change versus the 7 cities that they were in when we invested a couple of years ago. I guess two comments on that. I think the team has gotten quite efficient in terms of how it opens up a new city, and new cities are often compared to adding an additional neighborhood in Bangalore or Delhi. What we've seen is they've gone from 200, 300 to 500 cities. Think that the consumer behavior holds up and the 500th city tends to perform, as well, if not better than opening up a new neighborhood in an existing large city. We haven't yet seen a ceiling there yet. We're pleased with the progress.
Cool. Thanks, guys.
Thank you. The next question is from John Kim of UBS. Please go ahead.
Hi, everyone. A couple of questions. First on food and then on online classifieds. Within food, you've talked about your commitment, enthusiasm for the space. When you think about the segments, what sort of IRR levels are you targeting here? What sort of underlying assumptions are you making about the 1PL, 3PL splits on the models? If we were to compare and contrast classifieds with food adoption moves early, but it seems like the fixed cost investment is sizably higher. On online classifieds, can you talk to us a little bit more about Panamera and convenience transactions? On the Panamera rollout, how far along on the IT deployment are you in terms of spend or timeline? On convenience transactions, once the margins normalize, what sort of margin range could we expect? Thank you.
Thanks for the questions. I will start with the IRR question. Larry, maybe you can say a little bit more about our perspective on 1P and 3P, if you don't mind. Martin can talk to Panamera, of course. I think if you look at IRR, so far, our investments in the food space have had an exceptionally high IRR. Basil, you may have the number off the top of your head.
30%.
They've been at 30%, which is obviously exceptional. I think going forward when we make investments, we aim to achieve IRRs that are in line with what we've done before, and that is what we work hard to achieve. Far, I would say exceptional, and the aim is for this to be a high return set of investments for us. I think if I think about this long term, what we get really excited about is that it's just at the early stages today, and there's a multiple in terms of market potential for later. Maybe Larry, you can speak to the 1P, 3P question because I also didn't quite hear that. Did you?
Yeah, I got it, I think. I think the question was touching on what mix we expect between 3P and 1P long term. This is really a market-by-market story. Even not just at the country level, but at the neighborhood level, what the right mix is. Across our portfolio, we lead with the consumer, and try to figure out what approach is best going to serve consumer needs in the market. In a market like India, this actually speaks to the last set of questions, just because there's a lack of not just food delivery infrastructure from existing restaurants, but restaurant infrastructure. The winner in India, across the cities, and in neighborhoods is gonna be a 1P player.
That's very different from where certainly our starting point was in Brazil was entirely a third-party marketplace, and we realized that consumer needs long term were increasingly going to be served by a first-party model. The team's done a nice job of rolling that out on the back of the marketplace. Today, those volumes account for a significant and growing chunk. It really starts with the consumer lens, to see what's the right model. We don't start with business model first and force it down on consumers.
Okay. Helpful.
All right. It's Martin here. Let me comment on the classifieds question. With regards to Panamera, we've pretty much reached the end of the line with regards to, let's say, the consumer side migrations with Latin America last week. Going forward, obviously, we'll continue to develop the platform, as I mentioned before. Also build out our shared services function together with our European platforms in OLX, as I said, improve the economies of scale on the technology and to reduce duplication and spend our resources more efficiently, which will allow us to build out infrastructure everywhere to get closer to the transaction, what we then call convenient transactions. With regards to margins, it's really early days. Convenient transactions comes in very different forms or flavors. It's in jobs, it's in goods, it's in cars, potentially even in real estate.
To give an example, what we solve in cars is price transparency, convenience, speed, safety concerns in many cases, and it's demonstrated people are willing to pay for that, depending on the market. Gross margins in buying cars and reselling can be 5%-15%. That's, I think, the entry point also to sell additional services around finance, insurance, and many other things, which will, in the long run, further bolster the margins on that line of business. It's early days. I think we've seen lots and lots of proof points that we fulfill real customer needs, and as per Bob's points, there's true synergies with the horizontal platforms. We are building out the infrastructure to make that possible at a global level. We'll unlock further monetization opportunities. Okay. Thank you.
Okay, Chris, I think we have time for one more question, please.
Thank you. The last question is from Masha Kahn of HSBC. Please go ahead.
Hi, thanks for the opportunity to ask a question. I wanted to ask about the classified revenue. On my estimate, it looks like all the revenue growth came from Avito and the convenient transactions. What's happening with the rest of the portfolio? I know that Poland, Brazil are growing, but why is the rest of the portfolio not growing? That's number 1. Second, can you tell me about letgo versus OfferUp and their competitive position? Thirdly, can you please explain what drove the net increase in stock-based compensation in the first half? Thank you.
Yeah. It was a little bit hard to hear, so we'll try to answer your questions as well as we can, but we may need a clarification. I think first you asked about the source of growth. If I'm not mistaken, I think Basil can answer that, and Martin can speak to letgo, OfferUp, and I think Basil can talk to stock-based compensation.
Yeah.
If we missed anything, just let us know.
Yep. Let me deal with the first and the last, and then let Martin deal with Letgo, OfferUp. As I said in my script, Masha, in fact, we're seeing growth across the portfolio. Brazil's growing 25%, Poland is growing 27%. India is still very early days. We're not pushing monetization yet. We're still pushing user acquisition and growth. Even there, we're seeing good growth. It's not just Avito, we're seeing growth across the portfolio. That growth is in line with the plan. We remain confident about the longer-term growth, which will then drive profitability and cash generation. On the share-based compensation charge. Well, first of all, as Martin said, we're building a tech-enabled infrastructure behind Panamera that requires engineers, that requires people. We've added more people, and they need the short, medium, and the long-term retention component. It's more people.
Of course, what you see in the business here is a business that's growing profit, it's growing top line, and that drives valuation up. There's a little bit of that coming in. It's a little bit more impactful in markets that were historically loss-making, such as Brazil, which is now profitable. Now you have more confidence, and that, of course, that's an important milestone that drives valuation. Let me hand over to Martin to talk about letgo and OfferUp. letgo is in two markets, in the U.S. and in Turkey. I think your question is specifically about the U.S., which is a huge market for classifieds, with many different platforms competing for market share. letgo is one of them. There is OfferUp, there's Craigslist, there's Facebook, there is several vertical offerings in every large category.
It is a very competitive market. letgo is to take advantage of this fragmentation to develop a sizable business that captures a fair share of trade. As also shown next week, letgo's revenues are growing quickly, burn is coming down, and it's about holding its ground against our competitors like OfferUp. We see this as something that can deliver us a handsome return in the medium to long term.
Thanks for that. Are they still the leader of the market or they're behind OfferUp now?
I'll present some metrics next week, but basically, they're both in the same ballpark. Depends a bit what metric you look at.
Thank you so much. Thanks.
Great. Chris, I think we are running out of time, I am going to close it off, if you don't mind. To conclude today's session, I would like to remind you that we mentioned a few times we're preparing for, I think, what will be an exciting Capital Markets Day in Amsterdam next Tuesday, the 3rd. We actually will go in depth in all our key operating segments, and in particular, do a deep dive into our food business. If I look at our priorities going forward, they are around driving further scale and profitability in classifieds, in payments, and in fintech and in B2C. We will continue to invest in food delivery to enhance the product, to invest in technology and delivery capabilities, and we intend to at least maintain our growth and defend our market positions.
We intend to deliver a great return in everything we do, and we will maintain our disciplined approach to capital allocation. Operationally, we will continue to build strong teams, and we are very much focused on embedding and operationalizing artificial intelligence and machine learning to enhance our products and our service offerings. Finally, we're focused on unlocking value for our shareholders, and where sensible, we'll take further steps to address the discount. With that, thank you very much for your time and your great questions today, and thank you very much. Talk to you next time.
Thank you very much, sir. Ladies and gentlemen, that then concludes this conference call, and you may now disconnect your lines.