Ladies and gentlemen, welcome to the Delivery Hero Q4 2023 Trading Update Conference Call and Live Webcast. I am George, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Bast, Head of IR. Please go ahead, sir.
Hello, and welcome, everyone. Thank you very much for joining our Q4 2023 Earnings Call. We would like to remind you that this call is being webcast, and a replay will be available later today on our website. With me today, we have Niklas Östberg, CEO, and Emmanuel Thomassin, CFO of Delivery Hero, who will take us through the most relevant aspects of our Q4 performance and the 2024 outlook. After that, we will look forward to answering your questions. Now let me hand it over to you, Niklas.
Thanks, Christoph. And hey, everyone. First off, Happy Valentine's, and thanks for joining. We know you've seen our pre-announced results, and we are excited to give you more color on our performance today. So let me say upfront that we understand that many shareholders are keen to understand our liquidity position, and we have heard you. I would like to ask you to view our liquidity in context of our performance and the many levers that we still have available to increase our margins and cash flow. This gives us great confidence in our ability to manage our liquidity. Our conservative plans contain ample caution and do not rely on any M&A outcomes materializing. And if conditions change, we have other plans and can pull other levers.
We will share more information on this topic in a few minutes, but let me first share more about our performance to set the stage. So our business continues to advance with GMV growth of 4.7% year-on-year in Q4 and full year 2023. Both numbers in constant currency and excluding the effect of hyperinflation accounting. That means we have reached the upper end of our 5%-7% guidance range. Revenue grew faster. It grew at 16% in Q4 and continued to outpace the GMV development. Due to strong growth in combination with strict focus on profitability, the Adjusted EBITDA margin rose to 1.1% in H2 2023, which correspond to an earnings uplift of EUR 390 million in the second half of the year alone.
For the full year 2023, this means Adjusted EBITDA increase of more than EUR 870 million. The strong Adjusted EBITDA improvement has been seen throughout the business. The earnings trajectory in our profitable markets continue to improve. Furthermore, APAC and LATAM turned positive on Adjusted EBITDA level in Q4 before group cost. You will also see later in the presentation that we substantially improved the performance of our unprofitable countries, as well as integrated verticals. This puts the business in a very strong profit trajectory for 2024 and beyond. We are proud to have achieved this without having to sacrifice growth or market position. In most markets, we have even gained substantial category share.
Last but not least, we have finally reached cash flow break even during H2 2023, which implies a free cash flow uplift of EUR 330 million year-on-year in H2, an improvement of more than EUR 600 million compared to full year 2022. Again, we have achieved this while still maintaining our clear category lead in most of our markets. Our clear category leadership, combined with our strong profit trajectory and positive free cash flow outlook, puts us in a comfortable position to repay all debt maturities organically. We have also had a very good start on 2024. If we then move to slide 4, I think it speaks for itself.
But our top line growth was driven by strong order development in most of our segments, and again, the growth was delivered while still delivering substantial profit and cash flow improvements. If you take a look at slide 5, you can get a very good understanding of where our growth is actually coming from. Last quarter, four out of five segments were generating revenue growth of between 15% and 26% year-on-year in constant currency and excluding Hyperinflation Accounting. Now, let me hand over to Emmanuel, who will give you a deep dive into the financials.
Well, thank you, Niklas, and also warm welcome from my side. Well, let me start by recapping our achievements for the past year, which really was a landmark for Delivery Hero. We deliver on all the ambitious guidance parameters for 2023, which we, in some cases, even raised during the year. We already announced during last week's pre-release that we deliver on our guidance for GMV, revenues, adjusted EBITDA and free cash flow. And we achieved this despite FX headwinds and hyperinflation. Today, I would like to shed some more light on additional guidance parameters that we digitally reached. First, around 75% of our platform business was profitable in the full year 2023, with a profitable platform business generating an adjusted EBITDA run rate of more than EUR 1.3 billion in Q4 2023.
Meanwhile, the adjusted EBITDA from unprofitable platform business, as per our full year 2022 grouping, performed ahead of our initial expectations, showing a faster than expecting reduction of its negative adjusted EBITDA contribution, reaching an adjusted EBITDA margin of around 1.4- 1.4%, in Q4 2023. Also, the adjusted EBITDA for our integrated verticals performed better than expected and improved by around 60% year-on-year in Q4 2023. Naturally, if there, as we have already shared before, Dmarts, which account for 95% of our integrated verticals in terms of revenue, reached positive gross profit already in June 2023, and for the entire second half of the year. So now let us dive into the performance of our individual segments. And we start with our MENA segments, where we continue to see great momentum.
We post growth GMV, strong GMV growth of more than 20% in Q4 2023, excluding the impact of our from hyperinflation. This is driven by the strong growth in orders. A commitment to deliver an exceptional customer experience, pair with a flawless execution, have been pivotal for our growth trajectory in the region. Moreover, this enable us to strengthen our foothold in key markets as we continue our category share leadership. Additionally, our presence in early-stage market like Egypt and Iraq is gaining momentum over the past year, and so we are very pleased with the developments in Turkey. It's also very encouraging to observe our great achievements in profitability. The maturity of the markets of the segment already operate at an EBITDA, adjusted EBITDA to GMV margin above 5% for the full year 2023.
This is including all central costs and already within their long-term margin range of 5%-8% for the group. The MENA business has also shown outstanding development in areas other than profitability. And here, I would like to highlight that in Saudi Arabia, for example, where a new logistics regulation will come into force in 2025, we already deliver the vast majority of our orders in a legally compliant way, ahead of a new legal requirement, as we played a pivotal role during the process, working closely with the local authorities. But we will be fully compliant with the new regulation long before it comes into force. So now let's move to Asia on the next slide. As you are aware, the overall top-line development in Korea is still influenced by the normalization post-COVID, and also the hypergrowth experience over the past three years.
Also, the competition intensified over the last 24 months, and in particular last year, with Coupang Eats launching the subscription model and program. But despite this aggressive offering of Coupang Eats, Baemin was almost the same category share as 2 years ago. Our growth in South Korea was normalized and our GMV declined 2% year-on-year in constant currency in Q4, but accelerate in December as continue also well year to date. Our revenue growth in South Korea is very strong, with double digits growth in Q4 and full year 2023. Our OD share has increased by 6 percentage point year-on-year nationwide, and also reach an OD—we reach an own-delivery share of 21% in December. And in the capital, Seoul, we already have today an OD share that is exceeding 60%.
Turning to APAC, we still see customers adapting to more targeted promotion after a phase of heavy budgeting across the industry. Moreover, we put a strong emphasis on improving our unit economics in the region. This had led the APAC business into Adjusted EBITDA breakeven, excluding group cost, in Q4 2023. Since mid-November, we've seen our business picking up in growth. So now moving to Europe on the next slide. Again, Europe continues to perform very well. The GMV is up 16% and revenues is up by 20% year-on-year at constant currency. Our growth has further accelerate in 2024 even. The segment within the segment, Glovo performed above the average terms of GMV and revenue contribution.
Growth will also reduce adjusted EBITDA burn by around 60% in 2023 compared to the previous year, and even faster than what we initially expected. As we're foreseen this trend to continue in 2025, we will at the similar pace. Now moving to Americas on the next slide. GMV and revenue both grew by 15% in constant currency and excluding the hyperinflation adjustments for Argentina that we had to reflect in the last quarter, so in Q4 2023. For GMV, these adjustments were about EUR 550 million, and for revenue, about EUR 130 million in this quarter. Above all, we are very happy with the performance in the region. The adjusted EBITDA burn for the full year was down by more than 60% also.
And looking at the current numbers, we see macro instability, uncertainties impacting the year-on-year GMV growth in European currency in Argentina, while the rest of the region is growing strong double digits. But we remain cautious for the coming months due to the uncertain economic outlook in Argentina. And now to our integrated vertical, on the next slide. So here, the segment generates strong GMV and revenue growth of 24% in constant currency and excluding hyperinflation adjustments. Unit economics are further improving in line with a strong gross profit development. The margin, the gross profit margin, we're actually growing above 100 basis points, quarter-over-quarter in Q4.
With regard to our global footprint, we're currently around 932 Dmarts in Q4, which is only 3 stores less than in Q3, but almost 300 less than in the same period of time last year, including the global stores. So we reduce it by 300 compared to last year. We still work on optimizing our footprint and expect to combine or close around another 50 stores in 2024. During Q3 also, during 2023, we closed the majority of our kitchens within the group, with the exception of MENA, where unit economics and benefits for the platform business, like inventory, are very positive. On the full year basis, the segment is now gross profit positive. Adjusted EBITDA improved by over 40% year-on-year, and the burn is reduced by almost 50% compared to 2022.
We also expect this positive trend to continue due to the improvement of the unit economics and to grow the numbers of business per store. Now, on to the gross profit margin on the next slide. The gross profit margin of the platform business, which closed to 8% in the quarter, which represent an increase of 2.5 percentage point since we started our push towards profitability in the beginning of 2022. MENA, Americas and the APAC region lead the group in terms of gross profit margin and are already above 10%, with delivery CPO optimization across the region, driving quarter-over-quarter margin expansion.
And even if it's still some way to go to achieve a long-term margin target of 10%-13%, we can clearly see that we constantly increase our gross profit margin across the entire platform business. And although not on this graph, I'd like also to share that integrated verticals continue to perform very well and reach a gross profit margin of more than 3% this quarter, so in Q4. And this is eight percentage points better than the same quarter last year. Integrated verticals will continue to ramp up nicely during 2024, with gross profit margin projecting to almost double towards the end of the year 2025, 2024.
The positive development in the group gross profit margin is also supported by the rollout of our ad tech business in Q4 on non-commission-based revenue, or in short, NCR, amount to 2% of the group GMV. So now let me give you an update on the liquidity on the next slide. At the end of H1 2023, Delivery Hero had cash and cash equivalents in the amount of EUR 1.9 billion. In H2, the group reached free cash flow breakeven during the second half of the year and generate a total free cash flow between 0 to -0.1 billion in H2.
This was driven by an adjusted EBITDA of more than EUR 240 million, positive, a CapEx of 0.6% to GMV, leasing of 0.3% of GMV, and tax at 0.4% of GMV, and also a small inflow from working capital. The net interest amount to EUR 70 million in H2 and EUR 120 million euro in full year 2023. We add also another 0.1 billion of earn-out from previous M&A. Putting everything together, this bring us to cash and cash equivalents of EUR 1.7 billion at the end of the full year 2023. Of this one point seven billion in cash, exactly two point two million, so two point two million euros, were restricted.
Also, the amount of cash located in hyperinflation countries like Argentina or Turkey were less than 3% of the group cash. Now let's move to the next slide, where we lay out our future, our future cash flow generation. To be clear, we're not going to provide formal cash flow guidance until 2028 on today's call, nor a detailed view per year for confidential reasons. But we still want to give you a better understanding on our future cash flow trajectory. What you see here is a simplified view of the fundamental factors that will determine our cash flow position over the next few years. As you can see, we have sufficient liquidity buffer to cover all the maturities until 2028 and beyond, and this is true regardless of the time period selected.
So we are not including potential effects from M&A or refinancing. I mentioned in the past, we will consider the potential investment in liquid investments as part of a capital allocation trajectory. M&A lies beyond our control, and therefore we don't rely on it. Refinancing can only improve our cash flow position, and excluding it makes this view even more conservative. So we start the year 2024 with EUR 0.17 billion, I just mentioned, in unrestricted cash and cash equivalents. This was also before the repayment of the 2024 convertible in the amount of EUR 287 million, and before the investment of the Delivery Hero stake in the amount of EUR 140 million.
Then, we project our levered free cash flow from 2024 to 2028, based on the GMV CAGR, substantially below our long-term ambitions until 2028. And we also took a rather conservative view on adjusted EBITDA margin expansion, getting close to our guided range from 5%-8% long term by 2028. So this expansion will result from GMV growth and the continued advancement of our gross profit margin, coupled with a rigorous and disciplined review of our country portfolio and operational efficiency. The country portfolio review is a constant exercise since the creation of the Delivery Hero, and I won't list all countries that we invest over the last 10 years, but Germany is probably the most prominent one. And the search for more efficiency in organization includes the allocation of our human and financial resources.
A good example is, surely there are the 25 platforms migration performed over the last 10 years, with the Yandex Eater migration in May 2022 being the latest. And we believe that this is generally a healthy but reasonable expansion of Adjusted EBITDA margin on a yearly basis, and we have plenty of levers to expand this margin faster if we require. The Adjusted EBITDA to free cash flow bridge is based on a previous long-term guidance, which is also on the next slide of this presentation. We have taken also here a conservative approach in terms of below-the-line optimization of the spending. And in addition to the above, there are various measures at our disposal for effective cash flow management.
There's a range of measures that we could implement to unlock hundreds of millions EUR in additional free cash flow, and these actions have not been accounted for in this review, as we do not optimize for long-term value. I'd like to emphasize something here. I'd like to emphasize a commitment to constantly evaluate our portfolio. We not hesitate to engage in further portfolio rationalization or pursue additional efficiency gains in operation. And this approach have been instrumental in significantly altering the financial trajectory of the company in recent years, and we are dedicated to continuing on this path in the future. So now on the next slide, where I will take you through Adjusted EBITDA and cash conversion in more detail.
Our gross profit margin expanded by 1.4 percentage points in 2028, and we expect it to continuously increase over the coming years, between 10%-13% by 2030. We reach this through a mixed effect of increasing AOVs, growing high margin advertising revenues, service fees, order stacking, priority delivery fee, and also improving profitability of our Dmart. At the same time, we work toward enhancing our marketing efficiency and strict cost control, improving our operating leverage. As you can see, we already reached our long-term target for marketing spending as a percentage of GMV in 2023. As our markets mature, we believe there is further room for improvement as our best performing market operates very efficiently, with marketing spending of around 1% of GMV.
In 2023, we once again increased our adjusted EBITDA margin by over 1 percentage point, and our guidance for 2024 assume another approximately 1 percentage point margin expansion. Going forward, the way we operate the business and the combination of continued gross profit margin expansion and operating leverage, should result in continued adjusted EBITDA margin expansion. Now, looking at the lines between adjusted EBITDA and free cash flow. For CapEx in 2023, we remain at 0.6% of GMV as we build a few fulfillment center and had to expand some of the local office as we return from the work-from-home environment. For 2024, we expect a stable development of our CapEx, resulting in a slight decline as a percentage to GMV, due to investments in fulfillment centers, relocation, and optimization of some Dmarts.
The vast majority of our CapEx in 2024 will serve growth and optimization. Obviously, CapEx are in our control in terms of decision, and in the long term, CapEx to GMV should improve to around about 3%. Now, working capital, which has resulted as a small cash flow, cash inflow during the last two years, and we expect this to continue going forward. We prefer to take a rather conservative approach, but are aware-- we, we are fully aware that, we can manage our working capital even more efficiently in the future, especially for Dmart business. The lease payment will continue to grow in absolute terms going forward, but at a slower rate than GMV, which means we will see a reduction from 0.3% to around 0.2% on the long term.
The increase in absolute terms is linked to the current lease contract, with term and conditions linked to inflation development, while we also expect a reduction of on Dmart location during the year 2024. Tax paid, which are predominantly income tax, will be lower as a proportion of generated EBITDA, but higher impact as proportion of GMV as we continue to increase our earnings. In the early years of Deliveroo, we have continuously pursued opportunities that are here to improve the tax efficiency in our portfolio. Introducing, for example, transfer pricing agreement back to 2014 already and improving it since. And also, not part from the free cash flow, but we also like to give a visibility on our thinking in regards to share-based compensation.
The share-based compensation represented around 0.5% of GMV in 2023, well below the average of our industry. For 2024, we expect the ratio to remain more or less stable. Long term, we now expect this position to be around that 6% of GMV. Let me now hand back to Niklas, who will take you through our case studies.
Thanks, Emmanuel. Another topic we would like to update you on is our progression on advertisement. Since you all know, we are monetizing our platform's audience through different ad products, which enables our restaurant partners to improve their visibility through various products. Both Premium Placement as well as Joker product were our best-selling and performing products since we started to ramp up ad tech. We are strong believers in the ad tech business and see high potential for growing it even further. If you look at 2023, we are close to EUR 1 billion here, with an uplift of over 60% compared to the previous year.
Our long-term target remains 3%-5% of GMV, and we have reached the lower end of this already in some regions, where in others, like South Korea, we are gaining good traction, but also have good reason not to rush it too much. Next slide, cover our path to profitability. Starting off with our profitable countries in the platform part of the business, we achieved an adjusted EBITDA run rate of more than EUR 1.3 billion in Q4 2023, which is approximately 40% more than the same quarter last year, or 2022. We compensated for FX swings and other events outside of our control and still delivered on the guidance we gave in the beginning of 2023.
We expect to continue the growth of adjusted EBITDA in profitable countries in 2024, despite the EUR 100 million-EUR 150 million investment in South Korea this year to drive own delivery and other products to be launched during 2024. Please do keep in mind that this investment range is already reflected for in our adjusted EBITDA guidance for the year, and we anticipate realizing the returns of this investment in South Korea starting from 2025 onwards. Now on to the next slide for the update on the development of the unprofitable part of the platform business. On this slide, you have the unprofitable platform business.
and we started showing some light on this in Q3 2022 trading update, and back then it was approximately 35% of our GMV coming from these countries. We maintained the grouping of countries consistent to demonstrate the progression over time on a pro forma basis. We have made significant strides over the last two years and achieved a -1.4 Adjusted EBITDA margin in Q4 2023, including group cost allocation. This performance not only exceeded our guidance for 2023, but also established a foundation for success for the years ahead. So now on to the next slide that will touch upon the integrated verticals. Significant efforts were dedicated to optimizing the operations of integrated verticals during 2023.
Notably, we streamlined our Dmarts footprint by closing over 200 stores, discontinued our kitchens business in Romania, and persistently explored strategies to enhance overall business efficiency. Despite these initiatives, we grew GMV and with 24% year-on-year. These initiatives also enabled us to exceed our initial guidance of halving the losses year-on-year in Q4 2023. We achieved a 60% year-on-year improvement in Adjusted EBITDA in Q4 2023. Next slide summarizes all profitability improvements on a group level. As you can see, we have made tremendous progress over the last three years as we executed on our rational growth strategy, emphasizing profitability, cash generation, and disciplined capital allocation.
We have improved the adjusted EBITDA margin to GMV with 3.5 percentage points from 2021 to 2023, reaching a margin of 0.6% for full year 2023. Our adjusted EBITDA guidance for this year is in the range of between EUR 725 million-EUR 775 million. When considered in conjunction with our GMV guidance, this implies a midpoint margin forecast of 1.6% for 2024. This would mean more than EUR 1.8 billion uplift in adjusted EBITDA in absolute terms since 2021, while still achieving clear leadership in the vast majority of our markets. Moving forward, we will continue enhancing margins gradually, working towards achieving our 5%-8% long-term range. Simultaneously, we expect free cash flow to grow substantially in the coming years.
I'll turn back to Emmanuel, which will give us his take on the guidance.
Thanks, Niklas. So for the full year 2024, we expect the GMV growth to accelerate to 7%-9% year-on-year, and the total revenue for the segments are expected to grow even faster by 15%-17% year-on-year. The growth rates for GMV and revenues are in custom currency and excluding the effects from a hyperinflation account. In addition, our gross profit margin will continue to expand further, which result then in adjusted EBITDA guidance range between EUR 725 million and EUR 775 million, which ultimately translate into a positive free cash flow before interest payments. Let me make one thing clear at this point, this is only the beginning, as we are building a highly profitable and cash-generative business by focusing on scale and leadership.
But before we go into this in more detail, I would first like to give you a better understanding of the planned earnings performance in the individual business segment. So now with Europe, we expect slight acceleration in GMV growth and a further material improvement in Adjusted EBITDA. Glovo successfully managed to reduce their losses from EUR 300 million Adjusted EBITDA in 2022 to less than EUR 150 million in 2023, and we expect this strong momentum to continue in 2024. We therefore expect Glovo to be around breakeven in Q4 2024.
In MENA, we expect to maintain our GMV growth and further earnings increase, and given their already strong EBITDA margin increase by 1.5 percentage points in 2023, and our plan, rollout of own delivery in Turkey, which will initially weigh a bit on the profitability, we would expect a rather moderate margin EBITDA expansion in 2024. For 2025 and beyond, the margin expansion really should continue. In Asia, we are planning with a low to middle single-digit GMV growth for 2024, and further margin expansions resulting in a material uplift in adjusted EBITDA. This is already, this already includes EUR 100 million-EUR 150 million investment in Korea, as Niklas mentioned just before. Despite the economic uncertainty in Argentina, we forecast around 50% GMV growth in the Americas segment.
This is driven by healthy customer demand and order volumes. In addition, we expect to reach Adjusted EBITDA breakeven, including group cost, including group cost in H2 2024. Last but not least, our integrated verticals business will continue to generate significant top-line growth. Following the streamlining of our footprint, we expect GMV growth to accelerate to above 25% year-on-year, and with a material uplift in gross profit, the Adjusted EBITDA burn should halve. Now we look forward to taking your question. Christoph?
Yep. So guys, before we start with the Q&A, I would like to ask you to limit your questions to one per analyst. Because this way, we can simply ensure that every analyst has the opportunity to ask a question. So now we can start with the Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only headsets, while eventually turn off the volume from the webcast. Anyone who has a question may press star and one at this time. Our first question comes from Joseph Barnet-Lamb, from UBS. Please go ahead.
Excellent. Thank you very much for taking my question. I'm gonna kick off with one on the Korean incremental investment, the 100 to 150 million. Is that what you expect to spend given current levels of Coupang competition, or is it based on an expectation of sort of an increase or reduction from current levels? Just trying to think how we should understand that sort of upside risk or downside risk going forward. So a little bit more color around that would be great. Thank you.
So we don't plan our business so much on what Coupang does or does not do, and we’ll have to assume that competitive intensity remains as it is right now. And our focus here is to continuously improve our value proposition for the ecosystem. The investment is in this spirit. While, of course, we react to Coupang Eats and Yogiyo, for that sake, we focus on our product and services that will bring value to the restaurant customers and riders. So the investments we do, we think have a very fast payback. In the example of own delivery, it costs to expand this fast, but over time, we have proven that the margins of own delivery orders are better than for the marketplace.
So therefore, what I say here, it costs to launch and push it and expand it fast, and we are gonna expand it fast. But, you very fastly also have the benefit of this through higher margins and better customer experience. There are a few other products that we wanna launch. We, we keep it still confidential, what those are and when we are doing it, but I think we are fairly confident that we can get Korea back on decent growth over, I don't know, 2024 and beyond. And I hope that we can, can regain some of the percentage point share that we, we actually did lose, of course, from a very high basis.
I think if you look on a two-year horizon, we haven't really lost share, but last year we did lose some, and I hope that the initiatives we are pushing here should hopefully have a good return for us and our customers.
Thanks, Niklas. So we can assume that sort of, it assumes some form of ongoing competition at current levels. Is that right? And are you willing to tell us what decent means with regards to a growth trajectory?
Yeah, I think we will have to assume that the spending continues. I don't know if it's sensible or not. I know we can all argue about that. I think overall, if you look at the customers and also external research that we do, customers do claim that we have a better experience, that we are the preferred choice, we are the home for the customers. But of course, if we get a good discount, they from time to time also go to another platform. So we know the quick return of promotions and discounts. We have seen it many times over. It does give a clear boost in orders, but it's not very sustainable. So I think the most of that boost has already happened. That happened during the summer.
I think since then, we haven't seen any change in. I don't see all in many other areas in terms of market share and their uplift there. Of course, the launch into new regions where they, of course, also got some orders and but also there we start to see the normalization of events. If they would pull back on promotion, of course, that would be positive, but that's not part of our plan. We would have to assume that they keep on the spending regardless if it makes sense or not. And in terms of growth, I, Look, I've said in the past, I think if you look at the cohort behavior of our customers, it's still improving over the years.
We also have customers keep acquiring customers. We, of course, had a temporary decline in frequency as we came from COVID years. We grew our business 3x during that time, pre-COVID to the peak of COVID. So of course, just maintaining that size, I think was a big achievement. But generally speaking, our cohorts keep on improving as from pre-pandemic levels, higher, and will continue to be higher. And as cohorts mature, they get more frequent. So based on that, we should continue to grow in frequency, as well as we still have a lot of customers that we haven't acquired. So, there is still plenty of room on the acquisition side. I think I've said in the past, and we should be growing between 5% and 15%.
I don't want to give now a specific guidance here in Korea, but our ambition is of course the 10-15, and it would be disappointing for us to be, I don't know, growing this business more like 5%-10%. So we hope in the higher end. I should also add here that we also expand our Dmart business there, or B-Mart, what it's called there. It is doing really well. Economics are good, but it's still a very small part of our business. The same with our quick commerce overall, still a very small part of business, doing well, but small part.
We think if we can expand that similarly to what we do in other markets, then we should be able to grow this significantly faster than at least the lower end of that 15 or 5-15 long-term growth rate. When we reach that, I hope we reach that range sooner than later. But yeah.
Thank you, Niklas.
Thanks, Joseph.
Our next question comes from Miriam Josiah from Morgan Stanley. Please go ahead.
Great. Hi, thanks for taking my question. Just one on Glovo. Just wondering if you could give us an update on the on-balance sheet and off-balance sheet liabilities for the provision. I just wondered if you had any more visibility on when or if that might become a cash outflow this year, and if there's any sort of key dates or anything around potential court proceedings or anything that we should be aware of for this year? Thanks.
Sure.
Emmanuel?
I think I covered that yesterday. So on the provision, I know like you're, we are part of the, of the Glovo rider reclassification is for Spain, and we have this already in the balance sheet or, or PNL. So this is provision. I think you're more focused on what we call the Flex and the contingency. We remain of the opinion that this is still a contingency, that basically our systems that we put in place is completely compliant to the Supreme Court decision that was taken two years ago. So that's what I can say from the reclassification of the riders. This is our opinion and on the contingency.
In terms of cash outflow, we also indicated that part of their Glovo fines, the vast majority, actually, is covered by guarantees, bank guarantees that we give, which is part of the SCF. So we don't we didn't draw our SCF, but part of it is reserved for bank guarantee line. So that's our, that's our, I think, the status quo today for the rider topic concerning Glovo, so before the Supreme Court and the flex model.
Great. Thank you.
In terms of flex, maybe I should to be, because you ask also cash outflow. So on the flex model, we do think that this is going to take quite some time to go through their well, through their legal work workflow of work process in Spain. So it's not going to be any impact for this year. And actually, because of our position, where we think we're completely compliant as of today, we think that this is still a contingency.
I think overall, we hope to give clarity, more clarity of the Spain situation in, let's call it short term. Yeah.
Our next question comes from Andrew Ross with Barclays. Please go ahead.
Great. Good afternoon, everyone. I wanted to ask about the logic as to why you sold Deliveroo in January. And I guess in that context, there seems to be some concern out there in the market on your liquidity. So could you just talk a bit about the parameters around the current liquidity the group has? Like, obviously, the headline cash of EUR 1.7 billion is a big number. It's helpful you've given us the restricted cash and the percentage that sits in hyperinflationary countries. But can you give us a bit more about the minimum liquidity threshold the group needs, how much cash you need in Germany, the cash pooling agreements that you have, and all the moving parts, or as much of the moving parts behind that as you could, to help reassure people around the current liquidity position? Thank you.
Sure. So maybe I start with Deliveroo, and then, Emmanuel, you can cover the, the cash side of, of the question.
Yep.
So, we were constantly reassessing our investment in Deliveroo, as it did not have the strategic logic as when we acquired it. I therefore don't think it should come as a surprise that we sold the stake. In terms of timing, when we started to sell, the stock was above 130 pence and more than 40% up from a year earlier, and also clearly above the tender offer. We could obviously not participate in the tender offer with a small sale, as our notification would have triggered pressure on their stock. Therefore, we had to wait until after the tender offer. Also like to add that only the last 4% was at a discount to the earlier tender offer.
So unfortunately, it was a little bit lower price on the last 4%, but we had to do an ABB rather than dribbling out. So therefore, lower price on the last 4% of that stake. Emmanuel, on the cash and liquidity and minimum.
Yeah. So I will cover, I will start with the minimum cash, because I think this is what, but you also will cover also cash upstream, cash pooling, and so on and so forth. So the first thing that also said in my before is that I would like first to clarify that, there's almost no restricted cash in our business. I said this before, and this number is only at EUR 2.2 million at the end of the year. So restricted cash, very, very low, nothing compared to the total. So restricted cash and potential minimum cash required to operate the business, obviously, two different things, but I wanted to clarify this.
On top, there are no material markets with restrictions on capital movement, so there is no really any trapped cash within our group. And I mentioned before, so like, you know, if you took countries where you do have hyperinflation, and here today in our portfolio, this is Argentina and Turkey, first, they are not operating positive cash flow generator as we speak, and they represent less than 3% of the total cash that we have in these countries. We don't have a defined minimum operating cash number, if you wish, that we use to steer our business.
But we do have a minimum cash on balance sheet that we need to have, and this amounting to EUR 800 million, as you know, as per our revolving credit facility documentation. With that said, I mean, we could operate our business with a lower number, much lower than that, but you know, we don't foresee in our cash position to go anywhere close to the defined EUR 800 million cash covenant, given our substantial free cash flow generation that we've foreseen for the years to come. That should also, as I mentioned before, exceed all our combined maturities. You also mentioned cash pooling. So we do have a cash pooling solution in place at regional level today. So we do have a cash pooling solution in Europe.
We do have a cash pooling in Asia, and so on and so forth. And we manage the, And this is managed more at the regional level. We don't have any limitation, as I mentioned, restriction whatsoever, to upstream cash. I will say there is two countries, to my knowledge, where you do have limitation, for obvious reasons. Let me list them for you. The first one is Ukraine. I mean, it's understandable. They are on the war, and there is no way that you can upstream the liquidity or the cash. The second is Pakistan. I think there's also Egypt, but I'm not quite sure.
But overall, as you can feel, this is countries that are from the euro currency, not heavy, and they're literally one of those or two of those are not also, positive cash flow generating. So overall, I would say limited restricted EUR 2.2 million, trapped none, and basically some limitations, are for three minor markets. Then, I mentioned cash pooling or minimum cash. I think you were asking also about, the cash at the holding level, so what we have at central. This amount of cash, at a holding company at a given time varies, so it can be misleading also, depending on the frequency of, upstreaming that I just mentioned, and also the amount of buffer, that we give to the local entities.
But that said, it can fluctuate quickly. And this is also important that, again, to remember that we have a very, very low restricted cash. Yeah, that's, I hope I covered. I mean, as noted minimum cash, cash upstream, cash pooling, hyperinflation. Did I forget anything?
That is extremely helpful. Thank you. Can I just clarify from Miriam's question?
Sure.
That as part of its bridge, there's not expected to be any big cash outflow related to Glovo this year, just to confirm that's what you said, just to complete this conversation.
That's correct. Nor we plan for the investments or M&A transaction in this cash projection. And indeed, we didn't plan any cash outflow for the flex part, right? So for the flex part.
Thanks.
Sure.
Maybe add there, the EUR 800 million covenant is before RCF or unused RCF, I would say. So the actual amount is actually lower than the EUR 800 million.
Yeah. Cool. Thanks.
Thanks.
Thanks.
Our next question comes from Marcus Diebel with J.P. Morgan. Please go ahead.
Yeah, hi, everyone. Yeah, very helpful answer so far. Just one more on the cash again, and maybe for Emmanuel. Clearly, you sent a very confident message on future cash flow until 2028. I think when we just look at this bar, we get to, like, north of EUR 5 billion without this taking its guidance, but I would say a very confident message. But how do you think about potentially refinancing? I understand, M&A is something you can't talk about on this call, and for obvious reasons, but on refinancing, I think it's interesting. I think the shares are obviously at low levels, partly because of balance sheet concerns, rightly or wrongly. You gave, again, a confident message.
But how do you actually balance options on refinancing and potentially positively impacting the share price versus the ability to repay almost organically all the deficit that is coming up? I mean, how do you balance these two things? That would be quite interesting, and any comment on this would be very helpful. Thank you.
Well, I mean, like, first of all, I mean, like, if you look at what our status, I mean, like, we do not require any additional financing to operate our business today. However, we always, you know, monitor the current market. And as you said before, I mean, we always act in the interest of the investors. We want to make clear here that, in avoidance of any doubts, that we already rule out already any ensuring capital increase or other equity-linked products at the group level at the current share price. So that's, I wanna make it pretty clear. We have ample access to a highly supported debt capital market globally.
We have close dialogue with our debt investors, and those investors has continuously expressed interest to invest in our debt, should there be another transaction in future. We also receive inbounds from investors expressing the interest to invest directly in some of our local entities. So theoretically, this would be another pocket of capital that we could tap very quickly if we desire to do so. So, but having said that, we don't need any external capital to run a business, as you've seen today. And there, you know, we would only engage with a debt refinancing transaction if this is beneficial for us and for our shareholders, and also in line with our efficient, but also basically prudent long-term capital structure.
And for that, we will only evaluate, because I mentioned this just before, minority stake sale locally, if it would have a broader strategic logic, but also create the shareholder value compared to the current status. So that's. I hope I answer fully your question here.
Yeah. Yeah, I just wanted to get your thinking, and maybe even given you mentioned this, so you haven't sold any other minority stakes, like Just Eat or anything else, just to round it up?
No, I mean, like, but, no, we didn't.
Okay. Super. Thank you.
We did not sell Just Eat stake, no. But we have sold minority shares, and we have sold, not in this quarter, but of course, in the past, we sold the majority of our Rappi stake at a big profit, by the way
Yeah
at a multiple return. There, we still have a very minor stake left there, that may be sold. And there are also a few other stakes. We also sold Just Eat stake in the past. So this was back in 2021 or so. I think we sold at 8.5x, 8x, 8.5x, 9x, something like that. Also with a very high return. Same, we sold Zomato with a very good return, that we also got as part of a transaction. And we probably also sold some other stakes, also with good returns. I understand that the Uber has not been a good return, but I think given the current environment, I think, yeah. But we have not sold the last part of our Just Eat stake.
Yeah. Okay, very clear. Thank you.
Thanks.
Our next question comes from Chris Johnen, from HSBC. Please go ahead.
Yes, hi all. Thanks for the opportunity, also from my side. So coming back to a point, Emmanuel, that you just made with respect to the options. I understand the share prices, yeah, frustrating for a lot of people. It kind of signals weakness. So with respect to the point that you mentioned, you know, the potential to, you know, maybe, you know, get an outside party in as a minority investor in some of the assets directly, I mean, how are you thinking, how are you balancing that? I mean, how much of an issue is the share price in your view?
You know, knowing that you, I think, made very clear today that the refinancing is probably not, not an issue, that you see no pressure to sell the APAC business. I mean, what sort of criteria would have to be met for you to consider, you know, selling a minority in an individual asset, maybe even a segment? I'm not sure how much you can say on that, but, I think that would be, that would be interesting. Thank you.
Sure. So again, I mean, like, the projection that you've seen today, I mean, that's very important. The green bar indicates our organic cash flow projection until 2028. So in this plan that we have, you don't need any kind of proceeds from any sales transaction, any stake disposal. And you will have truly noticed that we didn't also highlight our SCF. So basically, we based on things that we can control, on our business development, things that we can push, decision that we can make. So it's very important that this is clear. So what we did mention about minority stakes, and we will think about it, you have to be more than a cash. So cash is important. Don't get me wrong, I'm the CFO here.
So cash is one element, but you have to be also a value. If we sell a minority stake in the future, you have to be value creative from the business point of view. We wanna have a, we wanna see, we like to see, like, a value for not only in a financial value, but a business value. So they have to be more than just a cash, if I may say so. So that's our thinking. We do have, as you know, in our portfolio, we do have extremely attractive business. You know, the regions like MENA, you know, the profitable business that we have. So there is interest, there's interest from partners from stakeholders.
For us, we will always think the financial part of it, which is important, the valuation and everything, but much more, as I said before, the partnership. What do we get out of this minority stake that we would potentially consider to sell? What will be the benefit for the business beyond money?
If I may ask, how long or how far along are those talks at the moment? Is that something that could theoretically happen shorter term, or is that, you know, I'll take any color.
Well, obviously, I can't comment on the timeline, but this conversation, I would say, are almost ongoing, especially, you know, like, for business that are obviously proven that they are highly profitable, where the brand awareness is very high, where the local population identify itself to the brand very, very strongly. You can imagine that this kind of conversation are ongoing.
Perfect. Thanks a lot.
Thanks. Thank you.
Of course, it's also very painful for us. We understand that anyone who got into the stock has not made a good deal, and that is painful for us. So yes, it's not nice, and we don't like it. But in the end, we can only control our execution, and I think that we delivered on that, and we will continue to deliver on that. And I hope that that will also, over time, reflect our share price. And I know it's on here that we commit to minority stake sale. We keep on the ongoing discussions. There's an immense interest in it. Doesn't mean that we're gonna do it. We need to see strategic value from any investments. So, yeah.
And I think you also mentioned in that note, again, on foodpanda, or you mentioned Southeast Asia, so in the question. So again, this is nothing that we need to do. We have a strong and super attractive portfolio of countries in Southeast Asia that will contribute tremendously to growth over the coming years. In Q4, we were already turned a full APAC green break even for group cost, and that means there's no longer a drag on our EBITDA. And it doesn't mean that we are not, I don't know, we're still evaluating.
We constantly evaluate our core operation, and we have done selected divestment in the past, either when the synergy value for another party could generate more value than for us, such that there is an attractive price, or more so than for us to continue operating. So therefore, by no means are we in a position where we have to sell. We would only sell an asset, and this doesn't only go for foodpanda, this could also be other discussions with other partners. We would only do it if the value is larger than what it is for us to keep operating those businesses. And I think for Southeast Asia, I think we have tremendous growth coming. We also have a very strong global business.
I think we are multiple times larger than any competitor in the region, and we are way more cash flow generative than anyone in the region. Therefore, I'm also confident our overall position is only gonna get stronger from this point onwards. So by no means a must for us.
Our next question comes from Giles Thorne with Jefferies. Please go ahead.
Thank you. It was a question on Korea, please. Latest developments suggest that you're gonna be falling outside of the Fair Trade Commission's Platform Act. But Niklas, it'd be useful to get your perspective on the direction of travel there. And then also just any color or thoughts on how good K-Internet is as a lobbying body on your behalf, yeah, in that country? Thanks.
Yeah, yes, so we luckily fall outside of that category. But I think it wouldn't really make a big difference. So basically what it says is that you should not abuse your monopolistic position, which we don't do in either way. And we operate in a very compliant, non, I don't know, taking advantage of our size in any way. And I think there's also clear evidence that someone who invests money can come in and enter the market. So I don't think it, even if we would be covered by that act, I don't think it would make a big difference to our operations, or none at all, for that sake.
And of course, we have very strong relation and connection in the Korean scene. So, we make sure that we operate compliantly and in the interest of the ecosystem. That's extremely important for the founder and for us to act in a very positive spirit in the Korean market.
Thank you.
Our next question comes from William Woods with Bernstein. Please go ahead.
Hi, thanks for taking the question. I suppose if you're very convinced in the ability to manage the debt maturities, why aren't you taking advantage of the discount in the convertibles and buying back some of the debt? Thanks.
This is our - I mean, obviously, we have to, as cash flow will, the cash flow projection will improve year after year, we will consider this for sure. I mean, we did this in the past, considering this, and this is basically a decision that we will take as our, as I said, our free cash flow will increase in the coming years. So that's something that we closely monitor, as we could take advantage of this. If you remember, we did a tender last year, that was also one of the reasons why we took this decision at that time, to repay upfront a part of the bond. When the last majority, the last part of it were paid back in January.
I think given our size, and we also make sure that we have a sufficiently good cash balance at hand. So we also, I think for prudence, we want to maintain that cash balance. Of course, if there will be, I don't know, either M&A or stake sale or anything else, then I think, I don't know, the proceeds would rather be to strengthening our balance sheet by either buy back, convert or debt. That's the first priority.
Understood. Thanks.
Our next question comes from Lisa Yang with Goldman Sachs. Please go ahead.
Hi, I have a follow-up question on the covenants. So what technically will, could happen if you go below the EUR 800 million, I think, covenants that you mentioned, and then you clarify that you will take out any sort of unused part. Could you maybe just confirm, like, what percentage of the RCF can we drawn or use as part of the, the, you know, bank guarantees to cover the liability? I'm not sure if that technically counts, as a, you know, to be able to deduct that from the, from the covenants. Thank you.
Yeah, sure. So the covenants you mentioned, the EUR 800 million, that I also highlighted before, which is aligned with our... The banks that are providing their revolver credit facilities. This covenant is based on our consolidated group cash flow, which is referring under the position, cash and cash equivalents in our financial statements. So by the end of the year, this was amounting about EUR 1.7 billion, sorry, as I highlighted before, of which we have to deduct the restricted cash. I mentioned also just a few minutes ago, amount, this is amounting EUR 2.2 billion. So, you know, we should almost not consider this. Just for your information, it was EUR 1.9 billion the year before. So this is like, you know, the same, at the same level.
We also can add our SCF. So the SCF undrawn is EUR 480 million, of which 240, roughly 241, have been used for bank guarantees. So today, if you, we could draw EUR 240 million from the SCF. So we can add this SCF, but we have to deduct the guarantees. And we don't have to do any adjustments for, because I heard this for restaurant cash whatsoever. So overall, if you add the EUR 1.7 billion plus the part of the SCF that is available, we will have like almost like your, yeah, almost EUR 2 billion of liquidity versus the EUR 800 million covenant.
So it would be very hard for us, especially after the trajectory that I just mentioned today, in terms of EBITDA improvement, free cash flow improvement, to be very difficult to, to treat our covenant of EUR 800 million. And obviously, this was the, Yeah, sorry, Niklas, you wanna?
No, please.
No, I wanted to say that this EUR 800 million have been defined, together with the banks based on the financials. So this is also like, this is not a cover, I mean, this is a very, a very important part of their, of their negotiation or of their, the coming together for the SCF. Niklas?
Yeah, and by no means will we ever get even close to that amount, as Emmanuel also pointed out. As I said, this EUR 800 million minus the RCF is unused, so the amount is even lower. So by no means will we ever get even close to that. And our cash flow break even this year, yes, there is EUR 120 million of interest payment, net interest payment, approximately last year, assuming similar this year. So we are clearly cash flow positive, including any interest payment, as we go into the second half of the year, and quite significantly so. So by no means will we ever get close to those covenants, that I can also guarantee.
Thanks!
Our next question comes from Jürgen Kolb with Kepler Cheuvreux. Please go ahead.
Yes, thank you very much. On a different note and subject, the Dmart business seems to be continuing to grow extremely strong, in spite of you closing and closing down stores. So maybe what is the winning formula that you found to make that business such a strong growing business? Is that something also where you would consider maybe opening up for a minority partner in that overall business in order to maybe boost it even further? Thank you.
Yes. So I, I agree. Thank you very much for the question. Yeah, I agree, it's doing incredibly strong. The growth is doing very well, despite the closures, if you look at order per store, GMV per store, and so, and so on, we are very happy, and we think that we're only in the very beginning of it. The margin expansion has continued to increase fast. Our ad tech, and which we think in that part of the business is rather between 5% and 8%, probably high, more in the higher end. We have just started. We are just at a couple of percent now. We started only, yeah, very recently. So we're a couple of percent now, but we can easily go to the 5%-8%, hopefully the higher end.
The procurement is also something that is doing better and better, and purchasing power. The fulfillment centers also help a lot there to further improve margin availability and so on. So I think overall, we are super happy. It not only is it very close to be breakeven, or we said by the end of the year, we should be very, very close to breakeven there, including overhead and so on, and continue to profit from there. And not only is it gonna be a very profitable part of our business, but it's also strengthening and giving our moat to our business. It puts us in a very strong position, and the service offering is absolutely fantastic, way better than other service offering that we have seen.
So that, of course, also strengthen our platform. And if you look at places like Middle East, as an example, the growth that we're having there in our business is despite having extremely tough competition, we are still outgrowing our competitors, both in percentage and absolute terms. And I think part of the reason is that we can have a way better service offering, not only in our food business, but also in Dmarts and other areas. So then the question, could you also consider taking minority investment? I think same as before, I don't know if there are strategic investors or value investors who can add strategic value, of course, we'll consider. But at the same time, I don't know, we also wanna making sure that we keep everything simple.
We think we have a fantastic business, and we are not really into trying to over-optimizing there. We like to focusing on operating our business rather than complicating things. So therefore, you, I don't think you should expect that. And I think also the fact that we've seen many players failing on building similar to the Dmart model with quick commerce, I think this also shows the strength of our platform and our teams. Thanks, Jürgen.
Our next question comes from Annick Maas with Société Générale. Please go ahead.
Hello. My question is regarding the Southeast Asian business. You made it clear you don't need to sell it, but, let's assume you keep it. Midterm, do you think this will need to have you reevaluate the strategy and maybe reinvest there as well in order to remain competitive? Or could you just keep it running as is, even though the competition is intensifying over there? Thank you.
Yeah. I don't think the competition is necessarily intensifying. I think the competitors also driven by driving growth and profitability. So I think that is name of the game for everyone. For us, as I said, we push profitability very hard to get to this breakeven point, to also avoid that this is a drag to our business, such that we can sustain it for a long period of time. I don't think that we have to invest more there. I don't know, as we see growth coming back, kind of, we can, of course, reinvest some of that growth, but still keeping the EBITDA line on a flat. And I think that over time should put us in a better position.
I also think what you have seen, we lost a little bit of share as we pushed for profitability last year, in particular in Q4. But we already saw in December, January, getting into February, I think we have been gaining share again, as. So I think the strategy worked out in the sense that we took some of the unhealthy part of the business out, and now we see a good growth coming in from that. So I would expect that the Asia business or APAC business will show very good growth. I think it'll be a strong growth engine for our business over time. It's probably the least mature segment. So, and I think that we can keep on reinvesting there to build a fabulous business in that region.
As I said before, we have a clear size advantage versus all our competitors there. We have clear cash flow pools in other parts of our business, and APAC is only a small part of our business. So, I think we are in a very strong position to become the clear leader in that market over time. But of course, this can take three years, four years, five years. And I also want to make clear, we are very rational people, and we sold our home market, Germany, we have sold other assets that have been very key, and we are in dialogue. And of course, we keep on evaluating.
If someone can pay us a price that is above that what we think the asset is worth, then of course, we will do a deal, if it is value to the shareholders. But, again, it's by no means are we in a position where we have to sell. We have plenty of cash, we are moving to cash flow generation, we can cover all maturities without any deal or refinancing or minority investments into any of our assets in our profitable entities. So, we will keep operating and take it as it comes for this region, and this is also true for other regions. I hope this helped.
Thanks.
Thank you very much, Annick.
Our next question comes from Joseph McNamara with Citi. Please go ahead.
Hi there. I just had a quick question on ad revenues. You pointed to a significant increase in ad revenue in 2024, so from the kind of EUR 1 billion run rate that you saw in Q4 to perhaps double that by this time next year. I guess what I'm trying to understand is if the EBITDA flow through is around 70%, and this year's EBITDA guide is to increase EBITDA around EUR 500 million year-on-year. It seems as though pretty much all of that increase can be explained by the increase in ad revenue, despite also strong earnings progression in the profitable and unprofitable platform businesses. So I guess, in that context, how are you thinking about balancing taking profit versus making investments in 2024?
Yeah, I think overall, our focus is clear, and I think our numbers speaks for itself. We are very focused on driving both a profit, cash flow, but at the same time, we don't want to do it at the cost of our market position, and I think that has also been clear. We have been gaining share in Europe, we have been gaining share in Middle East, we have been gaining share in LATAM. We have maybe lost a little bit of share in Asia as we're in APAC, but temporarily, I would say. But overall, I think we have been able to achieve this while still maintaining growth in a very challenging environment.
So our focus remain to drive profitable growth, drive strong cash flow, while still being very competitive and drive, Yeah, driving that growth. And you mentioned a point on ad tech, that alone could make a big part of the cash flow generation that we have this year. We won't comment exactly how much we are gonna drive our ad tech this year, but in general, I think we have many levers to reach out to the 2024 guidance, as well as our long-term cash flow generation. If that is ad tech or if that is margin, if that is premium delivery, or if it's just growth. Just growth by itself, as we keep very strict cost control and as we're growing, that itself generate a lot of EBITDA.
I think in general, every percent that we drive is something like EUR 35-40 million to the bottom line. So if we grow in the 5%-7%, and a big part of our EBITDA is already achieved by that growth, then additional to that, we have plenty of levers, way more levers than what our 2024 guidance implies. And if something goes wrong, well, then I pull some other levers, and we get there. And I think that was also clear in 2023. A lot of things went against us. FX moved completely against us, and the euro got very strong, while Korean won and U.S. dollar and so on weakened. And we made profit in markets with a US-dominated currency as well as in Korean won.
So of course, that cost us a lot of EBITDA. We also had hyperinflation. That was, of course, not helpful. And we have a competitor who went in very aggressively in one of our biggest market that we had to respond to. That was also not very helpful. And despite all that, we over-delivered on EBITDA to what we guided to. And that is just a proof of the evidence that if something goes against us in one way, we have plenty of levers in other parts of the business, and the same goes for this year. If something doesn't work out or if something surprising or something happens, there are plenty of levers to adjust for that, and we are gradually gonna pull those levers over the next years to come.
Excellent. Thank you.
Thanks a lot.
Our next question comes from Kiranjot Grewal from Bank of America. Please go ahead.
Hey, hey, morning, guys. Just building on the question around the ad revenues, it does look like most of your EBITDA in 2023 came from that, and looking at your 2024 targets, it looks like the majority, again, will come from ad revenue. So just outside of that, when do you think there'll be meaningful profitability in the underlying business ex ad revenues? Thank you.
Yes, I think it's, it's, I think it's true on the one hand, what you said there, that, I don't think that's true, that a significant portion of our EBITDA generation of the last few years has mainly come from that, because the profitability increase was EUR 1.8 billion over the last couple of years here, of which ad tech only contributed to a significantly smaller increase in EBITDA and cash flow than that. But of course, ad tech is a very important part of driving profitability, but not the only part. I know we have, I know other levers, as I said, stacking is probably our largest lever that we gradually pull.
Having high density of orders and volumes enable us to stack more and that improves our profitability in an enormous way. We also have things like saver delivery that we're working on, and we have pre-preferred delivery as one. There's also ways of improving our margins. And also the scale that we're having as we're driving more growth, that also helps the bottom line significantly. So as I said, for every % we grow, there is another EUR 35-40 million into the bottom line. And also we've spoken about, we have not only kept costs down, we have in many cases also taken costs down or flat. We have also taken it down.
So there are many levers that are pulling, and ad tech is only one of them. But of course, this is a very important one because it's one that doesn't impact the customer much, and it helps the restaurant, and of course, is also financially attractive for us.
Perfect. Thank you.
Thanks a lot.
Our next question comes from Silvia Cuneo with Deutsche Bank. Please go ahead.
Thanks. Good afternoon, everyone. I just wanted to come back to growth. Thanks, Emmanuel, previously for sharing some of the building blocks within the GMV growth. Just wanted to ask if you could please repeat once more, in particular, what you expect in Asia for 2024. And related to that, I wanted to ask what sort of acceleration you have experienced at the end of Q4 and year to date, just to get us more comfortable with the acceleration targets for 2024. Thank you.
So in terms of the, you know, the, you probably refer, sorry, to the slide 14 in terms of growth rate for, for the future, for the years to come. So here, as I mentioned before, we've been quite conservative in terms of year, GMV growth rate, below what we are ambitious or what we guide the market long term. So we want it to be conservative in our approach for the period of time, 2025, 2028. Concerning the Asian, as you mentioned, Asia, what we expect for this year, for 2024, here, we've been also planning a low to mid digits GMV growth in 2024 for the same reason. We want to be or we want to be conservative. I mean, we, as Niklas said, we see, we see that there, APAC.
So APAC, when I mention APAC, it's already including Korea, that APAC region, is coming back in terms of growth, that we've done tremendous efforts over the last years. We've been pushing unit economics, probably was impacting on top of the year after COVID, on top of the inflation, impacting our growth rate. But for that, now, we have our, we have a very solid, unit economics. So the growth rate, again, for 2024 for Asia, so Asia, including Korea, low to mid digits, to GMV. And for the coming years, in terms of projection, in terms of cash flow projection that we present today on the slide 14, this is below, what we, what we, how should I say that?
Expect or ambitious in terms of growth rate, because we want it to be conservative in our assessment.
Okay, thank you.
I think you also see the growth coming, and you saw every segment there. As we returned from COVID, all segments took a little bit of a hit, maybe with exception of one. Now, growth rate and revenue is between 15% and 26%, and also GMV is significant, or very, very strong, driven by high order growth. So I think it's clear that every market has come back, and so is Asia. So we hope that that's the next one to come. And that's also, I know, just modeling also on the cohort, the frequency increase over time, the acquisition. So we also have a good forecast in how growth will evolve over time based on cohort and acquisitions. So that's why we also have strong confidence that we can grow with kind of our target growth rate.
As Emmanuel said, we have not used our target growth rate, but a significantly more conservative view when we look at the cash side, because we have to plan on the worst-case scenario. Thanks .
Our last question comes from Andrew Quinn with BNP Paribas. Please go ahead.
Hey, yeah, afternoon. Last and pretty quick. I mean, Emmanuel, with the Q4, sorry, with the Q3 results, I think you surprised many of us by announcing that you were looking to retire in the next 12-18 months. I think it's pretty clear there's a lot going on. So is that still a comment that applies? Thank you.
Y eah, I mean, like, these comments still apply, but I want to highlight something. I mean, like, you know, we have, you have two guys on this call always. But basically, you have three board, a management board member. You have managers that are supporting this trajectory. So I think that's very important to know that this is not one or two managers, or commitment. This is the entire company that is going in that direction. So these comments still apply, but I hope that you feel that my commitment, you know, and this achieving 2024 onwards, we have, we're on the trajectory, and this is pretty clear. And as I said, this is not a commitment of one, two persons. This is a commitment of the entire company and the entire top management.
Last but not least, this is our commitment, indeed, from Niklas and myself. As I said, this is really the direction of the company is really, really clear. You know, we mentioned the share price today. You know, this is also something that we wanna be, we're kind of affected by the development, and that's why we wanna make sure that, you know, we deliver on what we say, not only two guys, but the entire company, the entire employees that are working tremendously for us. That's why we all deserve to deliver on these numbers that we mentioned today. This is a commitment that is not coming from only two persons.
Okay, I guess with that, you should be flattered, but thank you very much. Thanks.
Oh, sorry. Thanks.
Yeah. And Emmanuel would not retire from Delivery Hero if he didn't feel that the company is in extremely strong position. And his goal was to put also the company in a strong path on cash flow and balance sheet and all of that. So, yeah.
That's very true.
It's exactly what Emmanuel said. The commitment from me, PJ, and the whole team here is the same, and I think the numbers speaks for itself. We have, over the last couple of years, pushed EBITDA and cash flow very hard, and the commitments we're also giving today, going forward, stays with the whole company. That will not change.
Gentlemen, this was our last question.
Then thank you everyone for listening in. I know it has been a very painful time for you as shareholders. This is not only true for you, but it goes also for Emmanuel, I, and the rest of the DH team. Majority of our capital is in Delivery Hero, and we work all incredibly hard to deliver on all our commitments. Our internal KPIs are pointing in the right direction, and we strongly believe we have drastically improved cash flow while not compromising growth nor our market position. We believe this should bode well for the future of Delivery Hero, and I, I, I can't wait to get there. So again, thank everyone for your patience.
Thank you very much, everyone. Have a good one.
Ladies and gentlemen, the conference is now over. Thank you for choosing this call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.