Hello everyone and welcome to talabat's earnings call for the second quarter of 2025. My name is Shadi Salman, I'm heading Investor Relations at talabat and I will also be hosting today's call. All participants are currently in listen only mode and we'll have a question and answer session at the end of the presentation. In the meantime, please feel free to use the Q and A feature in Zoom to post your questions in writing. These questions will come to me. I will then read them out and have them answered live during the Q and A session. Please include your name and organization as well. You are also encouraged to ask your questions orally by using the raise your hand feature and I will hand the floor over to you to announce yourself and your firm and then ask your questions.
We will try to prioritize these live questions where we can. Please be aware that we are recording this webcast to offer a replay through our website afterwards. This will be within the Investor Relations section of our website at ir.talabat.com where a copy of this presentation can also be found. A replay can also be accessed by using the same registration link used to join this call. For any members of the media, please be reminded to share your questions separately with talabat's corporate communications team whose email is press@talabat.com. Today I'm pleased to be joined remotely by Tomaso Rodriguez, our CEO, and with me in person Khaled Al Fakesh, our CFO. For this quarter we've done away with the popular action figures from the previous earnings call and put in Studio Ghibli inspired profile pictures.
An old late March trend I hear you say, but they're now animated with Grok. In fact, if you stare closely at Tomaso's picture for five seconds, you can just about see him saying welcome to our second quarter earnings call. Or maybe saying it in Italian. Before I hand over, a few of the usual housekeeping points and agenda. I'd like to draw your attention to our disclaimer which is at the end of the slide deck. In particular, I would like to highlight the section on forward looking statements which cover such items as dividends and financial guidance which we have revised upwards this quarter and we will go through later. For today's agenda, Tomaso, our CEO, will take us through key highlights for another set of strong results this quarter that reflected continued momentum seen in Q1 and excellent progress made on our growth strategy.
Following that, Khaled, our CFO, will go through our financial results in more detail, particularly the main line items that we have disclosed today within our pro forma results and our revised guidance. We will then have the Q and A session at the end. With that, let me hand over to Tomaso.
Thank you Shadi and thank you everyone for joining this call. We're very pleased to report our second set of quarterly results this year, which as Shadi has said, show continued momentum from the first quarter. Just as a note, as before, the financial performance presented today for talabat excludes InstaShop. This is to make the comparison easier with prior year's periods as well as with our guidance, but InstaShop figures for the quarter are available in the appendix for talabat, again excluding InstaShop. GMV grew 33% in the second quarter of 2025 at constant currency. At the same time, revenue grew at a faster rate, 36%, also at constant currency. Our adjusted EBITDA reached $166 million with a margin of 6.8% of GMV, maintaining last year's strong operational efficiency. Adjusted net income also grew 25% on a year- over- year basis with a GMV margin of 4.8%.
We still remain on track to pay a minimum of $400 million in dividends for the full year of 2025, which results in a dividend yield of more than 4.5% when you base it on the latest share price. If we can move to the next slide please. Our growth during the quarter and the first half of the year has been driven by amazing progress we made implementing our growth strategy and as a result we've been witnessing an acceleration of monthly active users versus last year. Users increased 25% versus last year while last year the growth rate was 18%. We believe that this is driven by our core strategy that is paying off.
As a reminder, we believe that talabat is constantly to be the best company at our core business as this drives frequency of our customers, meaning that we constantly have to improve our selection, experience, and value. The second part of the strategy is to build that strong ecosystem on top of the core business to drive more stickiness and retention of the customers. To this point we're mainly focusing on multi-vertical, talabat pro, and Fintech. On the consumer value proposition, we have expanded our selection of vendors on the platform by 21% compared to last year to 77,000 partners versus 63,000 at the end of Q2 of last year. When it comes to customer experience, we've been constantly expanding our rider fleet by around 36%.
When it comes to value, we continue to push on expanding our partner-funded saving which are up 42% in H1 this year versus last year or $277 million. This is around 6.1% of our GMV compared to 5.6% of last year. As a reminder, partner-funded savings are free deliveries and discounts offered by the partners and on the talabat platform. Partners do that because they see a great return and marketing efficiency when they do it, and we believe it's one of the strongest moats that we have against competition. We also made excellent progress on the second pillar of our strategy, which is building our strong ecosystem. When you look at multi-verticality, the percentage of active customers that order across both food and grocery and retail verticals increased by 4 percentage points to 34%.
When you think that, as I was saying before, our MAUs increase at a much faster pace than last year, the fact that, you know, multi-vertical users increased furthermore by another 4 percentage points is quite remarkable. On the second part, which is talabat pro, we are very, very, you know, keen on expanding the customer base of our talabat Pro subscription program, and we more than doubled the adoption rate when you comp to last year in terms of improvement of the program. We're planning to launch the program in Iraq soon following the very successful launch in Egypt in Q1. At the same time, we're announcing the value proposition of talabat P ro that now includes also exclusive discounts on hundreds of key value items within our TMART dark stores.
It boosts discounts on bestsellers on food, exclusive dine-out discounts across our restaurant partners, and other exclusive discounts through partnerships such as online streaming services or, for example, ride-hailing services in UAE through Bolt. Lastly, on FinTech, which is the third piece of our ecosystem strategy, also the penetration of our postpaid product Enko-branded credit card has more than doubled versus last year. We also have launched our postpaid product in Egypt; as of now, it is on a small scale, and we want to scale it further next year, but it's showing very promising results. We're very happy about postpaid. We think it really supports our core business and helps customers manage cash flow, particularly in the run-up to pay week at the end of each month. If you can move to the next slide, please.
I'm actually very excited to share more about a new product that we just launched, which is the talabat p ro Family Plan. It was launched in the second quarter of this year, and we launched this product because parents across the region have been asking us how to be able to set up parental controls with monthly spending limits or budget setting features and different payment methods for each family member, and we delivered all of this through Family Plan. Family Plan is also great for the wallet; they allow you to share the talabat Pro benefits with up to three family members. In total, four family members can share a Family Plan, with just paying a slightly higher subscription fee when compared to a single solo plan subscription.
This means that if you complete a four family plan, this offers up to 60% savings to consumers compared to having every single family member subscribe on talabat pro. We're also showing much higher retention on customers on a Family Plan versus a solo plan. This is really the initial stages of this product. We have so many ideas on how we want to evolve this Family Plan in the future, but the signals are very promising so far. I will now hand it over to Khaled. He's going to go, as usual, through talabat's performance details, talabat's financial performance.
Thank you, Tomaso. As before, it's worth emphasizing a few points as we did in our last earnings call. Our published financial statements cover the same asset perimeter that we IPO'd following the corporate restructuring in September last year and also include InstaShop performance starting February 25th this year. The financials we are presenting today are pro forma financials for talabat but excluding InstaShop to allow for a like-for-like comparison of our performance, as we believe this is necessary because our reported Q2 financials do not include prior period comparatives given the fact that talabat Holding Plc, the listed entity, was only incorporated in September last year. The exclusion of InstaShop from the pro forma financial results will allow a like-for-like comparison with our historical financials and previous talabat-only guidance. We have provided brief standalone financials for InstaShop in the appendix. Now, going through the financial results.
As Tomaso mentioned, Q2 has been another strong quarter for talabat. The strong momentum from the first quarter has continued. Our GMV grew by 33% on a year-over-year basis at constant currency in Q2 due to a stronger order volume across all markets and all verticals. Our average monthly active users for the quarter grew by 27% and order frequency increased by 7%. GCC markets remain strong, growing at a double-digit rate of 26% on a year-over-year basis and contributing to more than 80% of GMV. UAE, our largest market, maintained its robust growth trajectory in line with the overall pace of the group, and Kuwait, our most established market, delivered an impressive growth of over 20% for both the quarter and for the first half of the year. Likewise, our food vertical grew more than 20% on a year-over-year basis, reinforcing its strong contribution to our overall growth rate.
Revenue growth continued to outpace GMV with 36% growth on a year-over-year basis at constant currency, largely due to the increased share of TMART GMV. You recall that TMART, our own grocery dark stores, and their GMV flows directly to revenue at an effectively 100% take rate. We have also seen an increase in subscription revenue reflecting our increased talabat pro adoption rate as well. Our adjusted EBITDA reached $266 million or 6.8% of GMV, maintaining the margin from the previous year and reflecting improved operational efficiency. A slight softening in gross profit margins primarily due to lower commission rate associated with a shift in product mix toward grocery and retail. This impact, however, was offset by operating cost measured as a percentage of GMV, reflecting our operating leverage.
Adjusted net income grew by 25% on year- over- year basis with a GMV margin of 4.8% compared to 5% last year and largely absorbing the increase in corporate income tax in GCC. We recall that as we mentioned in the previous earnings call, the UAE, Kuwait, Qatar, and Bahrain have adopted a minimum of 15% corporate income tax, which means the corporate tax rate of Talabat increased to 15%, up from 9% in UAE, 10% in Qatar, and 0% in Kuwait and Bahrain. Lastly, our adjusted free cash flow conversion improved 215% or 7.8% of GMV. This is still on the same basis of the adjusted free cash flow definition that we have presented during the IPO and in our IOM materials and subsequent disclosures.
It's worth highlighting that the increase was also driven by a one-off change in the timing of the cash flow related to net working capital that would potentially unwind in the future quarters. On this final slide, we review our updated guidance, which has been revised upward with higher minimum dollar value across all metrics and tighter ranges. This reflects our strong first half performance. We expect continued top line momentum and now project GMV growth of 27%- 29% at constant currency. This is slightly lower than year to date run rate as it takes into consideration the entry of a new competition in several of our markets in which we operate.
It also reflects slightly stronger year on year growth in the first half of the year due to a softer comparison base in the previous year where we still saw some boycott headwinds when it comes to global American brands. Faster growth for revenue of 29% to 32% at constant currency reflecting strong growth of TMART GMV within the product mix. Adjusted EBITDA margin of 6.5%, net income of 5%, and adjusted free cash flow at 6% coming at the lower end of the previous guidance range and reflecting further investments in growth, multi-verticality, enhancing our talabat pro value proposition, and further expansion of our TMART dark stores network. It's worth highlighting that on an absolute dollar value, our profitability and cash flow will remain equal or higher than previous full year guidance.
As a final point, if we include $180 million in InstaShop GMV for the quarter, GMV growth for the group would have reached 43% at constant currency. With that, I think we can now move to Q&A, I think.
Thank you, Khaled, and thank you, Tomaso. If you wish to ask a question, please use the Q&A feature in Zoom to submit it in writing, mentioning your name and firm. If you prefer to ask it orally, you can raise your hand and we will give the floor over to you to speak. We'll start with the first question. Joe Barnet- Lamb from UBS, I'll hand over the floor to you to ask your questions.
Excellent. Wonderful. You're able to hear me.
Yes.
W onderful. Just a question on the operational leverage. Obviously you've delivered 6.8% margin in 1H, and despite materially raising full year GMV guide, you've held full year margin guide at 6.5%. It seems to imply a very substantial step up in investment or a much larger headwind from mix or some other headwind or some combination. Khaled, I think you gave a few areas of investment that you drew out, but could you give us a little bit more color on the areas that you're investing in? Potential scale around some of those areas? That's sort of question one, and then maybe building off that, a couple of areas of investment that you didn't mention, but I'd be interested to get any updates on what you're doing in these areas. Your preferred partner scheme, is that growing? Are you investing in that?
Also, sort of rider availability, what are you seeing with regard to rider availability and are you investing further there? Thank you.
Yeah, very good question. I think it's basically the combination of both. One is definitely related to the product mix, particularly on the grocery and retail version ticket. It's actually growing at a faster pace than also what we are expecting and this is something we are super excited on and also takes into consideration definitely further investments in the core strategy. Whether we are investing in enhancing the value proposition of t-p ro through further co-funding, launching on time guarantee for the consumer, or for example, priority chat or priority support for this consumer segment. Same on driving further affordability across the board and also further investments on experience and enhancing our fleet. We made some good changes and investments on the rider supply, riders' earnings, well-being of riders, and some growth plans with third party logistics providers that we waive when it comes to the key preferred partnerships.
In general, we continue investing in selection. Right. That's the first pillar of our strategy. We continue looking at selection and trying to onboard partners, and as Tomaso mentioned, we've managed to increase our selection by 21% on a year-over-year basis, reaching 77,000 partners on the platform.
Excellent. Thank you.
Thank you.
Great. Thanks, Joe. Next, let me hand it over to Luke from Morgan Stanley. Go ahead, Luke. Floor's yours.
Yeah. Good afternoon everyone. It's Luke Holbrook from Morgan Stanley. My first question is just on the talabat pro subscription which has clearly been an area of focus over the past six months, can you just give us an update on how much of the customer base is now on that subscription or otherwise in percent of order terms? If you I know you've been a bit reluctant in the past to quantify it exactly. Any kind of year on year improvements in that regard would otherwise be helpful. The second thing would be on just your new personalized app that you talked about last quarter, what has that done to frequency retention or has it done anything to merchants willing to spend more on advertising? If the app is more targeted, it would just be helpful to hear color in that regard.
The final point, just on your guidance, why is InstaShop not included in the guidance for this year? Thank you.
Maybe I'll address quickly the guidance question and maybe Tomaso can address the talabat pro and the personalization. I think we kept InstaShop out just to make sure that the like-for-like comparison with the previous guidance and all with the historical financials that we basically published as part of the IOM, it's comparable. Also, given the fact that our reported number does not have any comparative, it's easier to keep reporting numbers on a pro forma basis for this year. From next year we will definitely include the institution because our set of financial numbers on a reported basis will be similar to what we have as pro forma. We will include that from next year onward.
I think, look, on the talabat pro penetration, I know we don't share exact numbers, but I would say that we are in very, very good shape. I would say when you look at and compare us to global top peers, we are in the same range group, I would say, in terms of penetration of GMV on talabat pro. As of now, talabat pro is definitely a big, big portion of our GMV, is covered by talabat pro, and we are very happy because that improves massively the stickiness and the frequency of our customers. Of course, there's still room to grow and still room to expand, for example, in Iraq this year. In the markets we're in, we're very, very pleased by the current penetration, and we want to further penetrate, of course, and that's why we're enhancing the value proposition more and more and more.
I think the game is really evolving talabat pro from kind of a free delivery program into kind of a lifestyle program that creates a lot of value to consumer, and it takes, as Khaled was saying, this requires you to sometimes invest a bit more. Rest assured that every single investment we make also on talabat pro is something that we believe being a very good long-term investment. We don't believe it being kind of a recurring investment, but more kind of maybe we co-fund a little bit at the beginning, but then we gradually dial it down over time, and we create and we co-create the benefit for the consumers in that particular way, and we believe that's the way to go. That requires a lot of iteration until you make that subscription formula, which is very, very hard to make it.
On your second question that was around personalization, I believe the moment we launched personalization, we saw, we measure many things when we look at app performance, but mostly I think conversion and frequency are important drivers, and I think we shared a bit of details on how conversion increased and app frequency increased as we rolled out our kind of V1 of more personalized recommendations, et cetera. I would say the personalization is kind of an ongoing effort. I think, of course, we A/B test every single variant and every single feature we roll out, but the amount of things we roll out every single day, it will make it hard to compare, like, personalization versus zero personalization. There are a lot of micro features and a lot of small details that get rolled out every single day, and we try to improve and announce on top of that.
Every single thing we do, we measure, we A/B test. If it works, we move it to production. If it doesn't work, we fail, we iterate, and we look into something else.
Thank you. That's clear.
Great. Thank you, Luke. Again, just going through those with raised hands. Evgeny Ankov from Jefferies, over to you.
Hi, good afternoon, it's Danny from Jefferies. Congratulations on the very strong Q2 and thank you for the opportunity to ask questions. I have two if I may. My first one, can you please give more color on advertising revenue as percentage of GMV declining quarter on quarter by around 30 bps. What was the impact of changing mix. Namely, higher share of 1P and InstaShop. What are the trends at the c ore free-to-business? It would be great if you can please also share current merchant penetration o f some key ad tech products and scope for growth. My second question is on InstaShop. Can you please give an update on integration, including revenue and costs, and if y ou can, please provide management expectations of GMV growth and margins. Thank you.
Yeah, so on ad tech, I think to be honest, if you look at ad tech as a percentage of GMV in the second quarter, we've been actually able to maintain it at 3.3% compared to last year. Given the fact that we have massively overperformed on growth, I think that's a pretty good achievement, to be honest, from the team to be able to maintain this penetration at a larger scale. Of course, we believe that. We always said that we believe ad tech moonshot should go to 7%, but we've always said that we don't take 7% in our midterm guidance. We are much more realistic when it comes to the execution and improvements that we will be able to drive.
In that particular regard, I think on InstaShop still the biggest focus area for us is related to how can we further accelerate back the growth of InstaShop and how we can tap into the customer segment that is non-overlapping. To be honest, I don't have an exact number that we can share now. Most likely we'll be able to share more color about InstaShop toward maybe Q4 of this year once these plans further materialize and then we embed that into our guidance for next year a s well. I'm not sure if Tomaso, you want to add anything or Shadi on this?
I was just going to add I think the numbers you're quoting are maybe on the reported advertised revenue were reported. These numbers we're giving, the 3.3%, which is almost flat or the same as last year, just to talabat only.
It was mainly impacted by InstaShop. Any dilution reported basis?
I would say so in general, I mean again on ad tech, on our food business and on our 1P dark stores, it's at good margins. There's more work to be done on the three.
Yeah, on it's exactly the point of Shadi. On the reported number you would see the ad tech that is generated from talabat and then the GMV basically includes the InstaShop GMV, and that's where you would see the dilution. If you exclude InstaShop, we've been able to maintain a 3.3%, that's clear.
Thank you so much.
Great. Thank you, Danny. Cesar Tiron from Bank of America, please go ahead.
Yes. Hey, thanks for the call and the opportunity to ask questions. I have twisted. Congratulations on the numbers. I guess the first one is to understand better on the various initiatives that you mentioned earlier to explain the lower margins in H2. Which one do you think has the largest impact? Is it driving affordability? Is it the changes to rider supply or earnings, or is it any other of these initiatives that really has more of an impact than others? That would be the first one.
The second question would be on looking at the margin trend and the decrease in H2 versus H1. Should we look at the H2 numbers, the H1 margins as a kind of a one-off investment, or do you think that's a guideline for what your margins would look like in the future in the next years?
Yeah, so I think. Thanks for the questions Cesar. I think on the first one is I would say there's no silver bullet or one area in specific we are investing in. We are just making sure that we are investing basically into the strategy. We're making investments when it comes to selection. We're making investments when it comes to building the ecosystem, specifically on co-funding some of the value propositions on the talabat pro and on the riders in general. Right. Whether the rider supply, the growth, the growth plans with 3PLs to make sure that we have an efficient fleet that we will be able to scale. I would say there's no one particular piece. The thing that I can tell you is that all of these investments are not short-term investments rather than a long-term value that we believe we can drive.
I think on the second half of the year, naturally the more we grow the non-GCC segment and the more we grow the GNR segments, you would see a little bit of a mixed impact on the margins and the margins would go down. I think what matters the most is really the absolute dollars value that we generate and we are actually making all these investments now to benefit from the momentum that we see when it comes to growth, especially ahead of the potential entry of a new competitor as well. It is rather to solidify the leadership position now and structurally invest rather than the future.
Thank you so much.
Great. Thank you, Cesar. Andrew Ross from Barclays, please go ahead.
Great. Hi guys, thanks for taking a question. I've got two. First one is to ask about trading in July. Obviously, there's been elevated noise from a geopolitical perspective in some of the countries near where you operate, and I guess for a period of time in Qatar. Can you just talk a bit about how that impacted demand, if at all, and more broadly give us a sense of trading for July and August so far? That's the first question. The second one is back on, there's been a change of ownership recently amongst one of your competition there. Can you just give us a bit of a big picture understanding of your position there, the share trends recently, how you think the change of ownership of the competitor might change things for you?
It would be helpful just to get your sense of that market in general, which is something that we don't talk about that often. Thanks.
Sure. Maybe I can quickly cover the first question. I think what we've seen so far, I would say luckily we didn't see massive impact on the geopolitical tension. That happens I think because it was for a short period of time. What we've seen is a similar trend that is ruined by seasonality and basically it's fair to assume that Q3 in particular you would see the growth rate compared to H1 is slightly lower because of the summer seasonality where mainly in the 3 markets that represent the major part of our GMV, Kuwait, UAE and Qatar, plenty of expats actually travel outside of the market in particular in July and August and they come toward end of August with the back to school season that takes place basically the last week of August.
Tomaso, would you like to comment?
Sorry, Andrew, I didn't understand when you meant acquisition. You're talking about, or you were talking about something else?
I'm talking about Snoonu .
Yeah. Look, I don't think that, I mean of course it's good that we see M&A activity across the sector, across the region, across the industry and I think that's positive for everybody. I don't know, we don't know exactly what are the plans there like in terms of leadership, tech, and how you want to tackle the two markets, et cetera. I do believe in general our strategy doesn't change. Right. At the end of the day we have competition across the region, we have competition in all the markets we operate in. We just focus heads down and creating the absolute best food business and complement that with the absolute best ecosystem that we can create. Right. I don't believe this changes anything when you think about our strategy.
Thanks. If I could just follow up on the first question. Have I understood correctly then that the year on year TM growth has slowed slightly in Q3 to date compared to Q1 and Q2? It's not correct.
If you look at the guidance, if you look at the H1 results, we were growing at 33% and the full year guidance is 27%- 29%, which implies that a slower year over year growth for H2. This is, I would say, particularly driven by three factors. One, we were definitely taking into consideration the competition landscape and the potential entry of a new competitor in several of our markets. The second thing that we just also highlighted is the softer base that is related to the boycott of last year that impacted the H1 growth. Lastly, it's mainly the more we push on affordability, we would expect the growth in average order value would be slower year over year because we are pushing much more on affordability. That's primarily the reason when you look at the growth rate of H2, it is slightly lower than H1.
Okay, thanks.
Thanks, Andrew. Last question, I think from an analyst, sell-side analyst, Maxim Nekrasov from Citi. Please go ahead and we'll go to investors.
Yes, thank you so much for the presentation and opportunity to ask questions. The first one is on guidance. Right. You mentioned that it incorporates the entry or potential entry of a new player. What is the timeline that you would expect to see new entrants? I guess we're talking about Meituan in your markets and whether maybe you started to see some action already in some of the markets. That's the first question.
The second one is, I assume many of us on this call have seen recent results by one of your peers in Saudi, namely Jahez, that saw a very significant EBITDA decline in the second quarter mainly because of the competition and the markets where Meituan has already entered. I wonder if that is a concern for you, that it may happen in the future in some of your markets and whether there are any specific lessons that you can take from what's happening. Somebody at the point. Thank you.
I think on competition we definitely keep an eye on the competition entry and we would expect them to launch soon in some of our markets. Most likely, for example, we would expect them to launch first in Qatar. I think on what you mentioned on the Saudi and the market, it's always much more challenging if you are in position two or three in the market versus if you are in position one because you would continue enjoying operating leverage. Also, the fact that we build this ecosystem and we have diversified revenue stream, it will allow us to basically continue having our ability to invest in the core business and keep monetizing the business outside of that, for example, the ad tech business, for example, the grocery and retail business, fintech, et cetera. I think we are not particularly concerned on what's happening.
Of course, we get lots of learning from the Saudi market. It's definitely something on the radar of the wider team in talabat to understand how the situation is developing. I wouldn't say that we are concerned about the results. Tomaso, I'm not sure if you want to add anything also.
Yeah, no, I would just say that, I mean of course keeping an eye is a bit of an understatement because we're full blown prepared for any launch of course. I would say that our, you know, markets represent a much more developed ecosystem than what you could probably see today in Saudi or in Hong Kong for example. Right. I believe like as we said many times, we're kind of number one player with a big gap versus number two and that drives kind of a very positive flywheel and ecosystem that keeps kind of spinning by itself. On top of that we have a very strong multi-vertical product. More than 30% of our GMV now comes from grocery. Right. There's a big cross-pollination and multi-verticality across our customers that use talabat, both for food and for groceries.
There's a very big portion of our GMV that is on a subscription product on talabat pro that is not just a free delivery product, but offers a lot of value, a lot of ecosystem value across all our products, all our customers. We have a big part of our GMV in some of our markets also being using fintech products of talabat. In general this means that it's much harder to give a discount to a customer and say, okay, move to us. Consider also the fact that also on the value piece we have a massive value that is provided in the terms of vendor-funded deals.
As we discussed at the beginning of the call, that is an area where we're focusing a lot, providing marketing tools for vendors to kind of invest and provide discounts to customers in exchange for increasing frequency and retention of their own customers on our platform. Right. When you look across all these aspects, actually I think these are all things that are kind of much more nascent or absent in other markets like Saudi or Hong Kong. That's why we believe we have a much, much, much stronger position as of today.
Thank you for this. If I may, I just wanted to follow up on what Tomaso just said and also appreciate your interview earlier today to Bloomberg on that vendor-funded deals and promos. I wonder how sustainable is that and whether there is a risk that with, you know, new entrants and competition like well-funded, where the vendors may decide not to fund those deals and free delivery by their own and, you know, let the delivery platform fund it. Is there a risk that those savings will be put on platform rather than vendor?
In the markets that we've seen, like where Meituan entered, the opposite actually happened. Vendor funding increased versus decreasing. That's also because we believe that most players around the world figure out that that's a more sustainable way of growing. Of course, it works only if you provide value to the vendors. If you just ask the vendors to discount on your platform and they don't see any value and they don't get in return growth, they will not do that. Today we said many times that when you look at, for example, our ad tech products, for every dollar that a vendor invests on ad tech, they get on average $5 back on revenues. That's not the lifetime value of the customer acquired, just on the single order where they place the advertising bid they get for every dollar on average, $5 back in revenues.
I think as long as we can provide that to our vendors and our partners, they would be willing to invest also because talabat, being the largest platform, is the one that can provide the largest growth if you invest. It's all a matter of ROI at the end of the day.
Thank you so much. Great, thanks. Maxim, let's go to some investors. [Yahweh Alonem] from [Maccas], go ahead. The floor is yours.
Thank you. Congratulations on results. Khaled, I know we discussed this last earnings call regarding the shared group cost. I just wanted to see if there's p otentially any plans to renegotiate or discuss t his is because it seems like this is related to a function of the business t hat is supposed to benefit from scale. If the related party does believe i n the scale that we hope talabat will eventually reach, I think it o nly makes sense for this to be renegotiated or discussed. Is there any color on that? Any plans to discuss this? Thank you.
Thanks for the question. I would say basically it's definitely something on our radar that we are looking at, especially that in some of our markets the transfer pricing regulations also changed and kicked in like UAE and Qatar. This is something that would also allow us to further look at the transfer pricing to make sure that we are in line with that and we are in line with the taxation regimes in general. I would say it is definitely on the way there and we are exploring this. I can't give you a definitive answer, to be honest now. It's something that we've been exploring for sure.
Thank you.
Great, thank you. I hope. Dan Mikhaylov, I believe from Vergent Asset Management. Go ahead.
Hi. Congratulations on the results. I just had two quick questions on the take rates. The first one is on the commission fee take rate, it seems to have expanded quarter on quarter by around 50 bps. I was wondering how much of this could be attributed to changes in the mix versus upselling restaurants as part of your wider push to improve app personalization and the value proposition to both customers and the restaurants. On the back of that, how much higher do you think that the take rate can go in light of your personalization efforts and competitive dynamics into H2 2025?
I think if you look at the financials, the change in the commission rate is primarily driven by the mix. When you look at verticals or when you look at country, either the commission rates are stable or slightly improving, specifically on the grocery vertical on the local shop side as well. The change is primarily driven by the mix. I think on the personalization, we believe the personalization would further improve conversions, would further improve probably our ability to scale ad tech products rather than expanding commissions on the food sector.
Yeah. Dan, on the GMV to revenue take rate, that's expanded. I think we explained in the slides that was due to a greater share of TMART commissions. Commission revenue as a percentage of GMV has actually gone down slightly, but that is really reflecting the product mix shift to grocery and retail.
Okay, thank you. Cheers.
Great. Thank you, Dan. All right. On some of the written questions, we have a question from Matt Peacock at Aberdeen. Please could you comment on the future trajectory of partner-funded savings as a percentage of GMV?
I think Tomaso covered that. I think Tomaso explained in detail that as long as we are providing value, whether on the uptick or providing value incrementality for customers on the partner or the vendor-funded deals, we believe that it would potentially keep expanding. Right.
Yeah.
Right, thank you both.
On the vendor-funded deals, of course the vast majority comes from our partners like restaurant, groceries, et cetera. We also have bank partners that provide discounts on specific credit cards. As we announce the value proposition of talabat pro becoming more towards kind of a lifestyle product, when it comes also to external partnerships, we can have in the future also vendor funding on external partners that are not on the platform. I think there are several venues to increase that percentage of vendor funding and provide more and more value to our consumers also without impacting the wallet share of our restaurant and grocery partners.
Great, thank you Tomaso. I think we've answered this question somewhat from Peter, draws the average in fund on the potential impact of Keeta on margins in some of our markets. How, you know, has this been baked in into our guidance this year? I think there is some that is taken into consideration. I don't know if you wanted to.
Yeah, I mean I think we answered this. Yes, we definitely take into consideration further strategic investments in our strategy, primarily across driving affordability, enhancing the value proposition of TMART, also further expansion of our topsource business when it comes to the wider supply into consideration. It's already baked in our full year guidance for the year.
All right, thank you. Three more questions from Matt Peacock at Aberdeen. In writing, what drove higher vouchers and other revenue discounts as a percentage of GMV in the quarter? He also asked a question on talabat pro whether there could be any cannibalization of individual memberships with this, the t-pro Family Plan launch.
Tomaso, you want to take the Family Plan one?
Yeah. On the Family Plan, I think it's early days, but I also think it will not be a very negative outcome if we see a bit of cannibalization happening versus a solo plan. The reason being that we see Family Plans have a much higher retention than the solo plans. I think one of the inspirations we had when we launched these Family Plans was like, I'm on a very popular language learning app out there that has this family subscription and I did it for my whole family and for my mom, my aunts, my fiance. We're all on this plan. After a few months, I stopped using it, but now I cannot cancel my subscription because all of them are still using it. I think we kind of push each other to keep using the platform because we all know we are in the same subscription.
I think we believe that the Family Plans create that sort of dynamics among the users that generate this extra frequency and this extra retention. Even if there was some cannibalization, which again, we're not seeing right now, I don't see it as a negative thing as of now.
Great, thank you. Tomaso and I believe have another question we can answer as well on dividend guidance and why there's been no change in dividend guidance. I think that's a relatively easy one. Even I can maybe pitch in here, which is, I mean, we have the dividend policy set at a minimum of $400 this year, but clearly this is a matter for the shareholders to debate at the next AGM in April next year. Whether this remains at the minimum $400 or is increased further would really be a shareholder matter rather than for management or the board to deliberate at this time. I can just see we're getting close to the top of the hour, so maybe one final question from those written down. Could you help us better understand talabat's competitive edge in ad tech? I think we've kind of touched upon this.
Additionally, how do you view the potential impact of drone delivery, and a favorite topic of ours, on your current business model, particularly in high density vertical residential areas in Dubai? Do you see this as an opportunity to enhance your offering or as a potential competitive threat?
Yeah, we've discussed this drones before. I don't think that in the short term or even in the midterm, it will have a significant impact into our business. Even if we look at China, where they're probably the market that is pioneering this one, if we look at the number of orders they do in comparison to the number of daily orders they do, it's really insignificant in terms of percentage of orders. We don't believe that in the midterm this is something that would quite change the business dynamics, I would say, because it requires lots of really infrastructure changes across all of the markets that we are in.
Great, thanks Khaled.
I also think it's worth mentioning that we have several pilots ongoing. This is an area that we are constantly looking at, and I think as Khaled mentioned, there are some challenges around infrastructure and some challenges about regulations. As of now, I think experiments are great, but as of now the product cannot be launched at large scale given the limitations and probably is more suitable in our region towards residential areas in more low-rise type of villas area rather than high-rise. Definitely in the future, if some of these things unlock, there is definitely potential in our region as well.
Great, thanks to Tomaso. I think with that, I know we have some questions still in the Q&As. We will try to get back to all of these questions offline following this call, but I think we're running out of time. With that, I'd like to draw our presentation to a close. If you have any further questions as well, you can write into us at ir: talabat.com. We will happily answer those as well. Thank you very much for attending and until the next call, have a good, good rest of the day. Thank you.
T hank you, thank you very much.
Thank you, everyone.