Hi, good morning, everyone, and welcome to today's conference call. We trust you have all seen the press release in the morning have also received the quarterly statement and also the slide deck for this call by email. If not, all documents are, of course, available on our IR website. Niklas will start the call with a strategic overview and also a summary of the most important milestones we have achieved in the past quarter. And after this, Emanuele will present the key financials and the case study on the underlying profitability.
After that, as always, there's time for your questions. And already now, let me say it would be greatly appreciated if you could limit yourself to 2 questions per person so that we get a chance to take questions from everyone. With that, thank you, and let me hand over to you, Niklas. Hey, everyone, and welcome to our call today. It turned out that the quarter actually was a fantastic quarter for Deliver Hero, and we are really happy and proud to present these results and also shed some more light on the profitability of our business, which is an area of interest for all of us.
Before going into the business and financial update, let me reiterate our vision on Slide 2 as this is really the bottom of why we are doing things the way we do. So we always aim to deliver an amazing experience fast and easy to your door. This has defined our We think it's humbling to see that several of our competitors now following our lead, while we still believe that they're far ahead in this development. Big thanks here to all the heroes doing a tremendous job pushing the experience every day, especially in these challenging times. So thank you very much.
We continue to pursue the targets we set out during our IPO in 2017. We promised growth, and we are very confident we'll deliver on these promises. After having raised our guidance for the current business year already in July, we are today already confident to reach the upper end of that increased guidance and therefore narrowing the guidance to the upper end of the range. And Emmanuel will talk more about that in a moment. Secondly, we go for leadership positions in the markets we operate in.
We have been very committed to this, and we will do what it takes. I'll share build tech and product leadership for a 3rd generation on demand platform. During the last years, we went from decent to a clear leader in most tech and product areas. I believe our tech architecture has been a clear advantage to achieve this. And finally, you know that we are believers in driving profitability for scale and automation.
We are thankful for the trust of our shareholders who already believe in our ability to make our own to of 5% to 8% of gross merchandise value. Then Slide 5 gives you an update where we stand regarding not only our global footprint but also the strength of our position. In more than 9 out of 10 markets we operate in, we are the number one player and we have further strengthened our position by gaining new leadership position in more markets this year. We are, as you know, still waiting for regulatory approval for the transaction in South Korea. I know this is something that you all are eagerly waiting for.
I can't give you any news on this today, but can just repeat that we're very confident to get the needed approval by year end. Closing will then take another couple of weeks until we can finally start truly working together for the benefit of the ecosystem in South Korea. We are determined to support the restaurants and the local stores we serve as much as our customers. Having said in the past that we consider ourselves the rational consolidator, and I believe that the past quarter has proven that again. I will briefly touch upon some of the M and A we have concluded in the past quarter on the next the key highlights of Q3 on Slide 6.
Firstly and most importantly, we are truly happy to let everyone know and in particular that's skeptic around earned delivery that our earned delivery business is now providing a positive contribution margin as a percent of GMV in all our regions. Emmanuel will give you more details a bit later. After many years of investing time and resources into the execution of this part of the business, we are now really seeing the fruits of our investments. This is a step change for us as now every order we receive helps to scale our business towards profitability. We're in growth mode, and I think it's still not the time to aggressively push for margin expansion, but it is clear that we are now entering a new phase of our development.
Beyond this, we also had a great quarter as far as growth was concerned. We doubled our orders year on year, and we had record sequential order growth of 81,000,000 orders, partially also driven by a little bit Q2 COVID impact, Nevertheless, a big record. As announced at the end of July, we launched in Japan and had a very encouraging there. In the important MENA region, we have not only strengthened our footprint with the acquisition of InstaShop, but also signed a deal with Mastercard. That would be a significant or significant relevance for our development and our economic success in the next years in the MENA region.
In the Americas, we have used opportunity to acquire GLOBALIS operations, thereby strengthening some of our existing footprint further, but also added 5 new countries. And finally, we have also executed on our ambition to have 400 DMARs up and
running by the end of the year.
We have added another 106 of those stores in the quarter, bringing the total number to 2 54 by the end of September. In October, we added another 100 stores. And I think as you've learned over the years, we stayed firm on our targets and commitments and this won't be an exception. Now some of the financial highlights. We achieved another quarter with around 100 percent order growth.
Our GMV was up by 7% year on year to €3,400,000,000 On the back of the strength of the euro, growth on constant currency was 81%. These numbers do not include BUBA. With Buba, it would have been around EUR 2,600,000,000 EUR 6.2 billion, my apologies, EUR 6.2 billion including including Gruva. Revenues in line with order growth with an increase of 99%. This was a slight acceleration from Q1 to Q2.
On On we signed a deal with Global for the LATAM operations with Peru, Ecuador, Costa Rica, Honduras, Guatemala. We added 5 new countries to our business. We now have a good starting point there and are looking forward to developing these markets further and keep on driving market share next year and beyond. As part of our transaction, we have also been able to do some in market consolidation in Argentina, Panama and the Dominican Republic, which obviously helps to strengthen our footprint in these markets. Based on July GMV run rate of around €330,000,000 The purchase price of up to €230,000,000 corresponds to an enterprise value to GMV multiple of around 0.7.
And this also is including the earn out. So as the closing actually happens, this multiple will be slightly lower. But assuming full earn out at today's size, it will be 0.7x DNB multiple, and we think that is an attractive one. Having already discussed InstaShop in a bit more detail in the call at the end of August, I want to cover all the aspects again today. As a reminder, Instashop is the leading online grocery marketplace in MENA and showing an astonishing 3 30% growth this year.
It is a great fit to our current online groceries offering in the region, and we're determined to expand its offering to additional countries together with the existing management team. In addition to the acquisition of Instashop, we have signed another important deal in the past quarter that will have a very positive impact on our offering in the media region. And then if you go to Slide 9, you can see the main components of the partnership with Mastercard. The objective is to fully digitalize the payment chain within the delivery ecosystem in the region. It builds on us having developed digital wallet solutions for our riders, customers and restaurants.
This was born from our vision to create an amazing experience for our customers. We have developed digital wallets and have quickly realized that this offers many advantages for everyone involved and can help lower our payment costs considerably. The partnership will help to develop these solutions even further and integrate them deeper into our offering and the entire payment chain. We love to dive deeper into the economic attractiveness sector of partnership but are bound by confidentiality clauses. We therefore ask you to trust that this is a very good deal, not only for Emmanuel.
Thank you, Niklas. Good morning, everyone, also from my side, and welcome to the FERC's earnings update of 2020. I'm very much looking forward to giving you an update on where we stand today. This is for two reasons. First, because the numbers are really outstanding and once again show the strong and the very positive momentum we have.
And second, because we are certain that the additional disclosure we're giving you today is hopefully enabling you to fully appreciate the underlying on Slide 11. So Nicolas already mentioned the strong headline numbers. And maybe to remind everyone that this is by far not the 1st quarter with that kind of growth. This is instead the 7th consecutive quarter with the year on year revenue growth of around 100%. And outside the financial metrics, we have again decreased the global delivery time other and now stand at 25 minutes in average.
So by now many of you know the next slide the next chart on which we show the order development index to the date where COVID was declared as a pandemic. So what you see here is that after the very first phase in Marsh and Apple, which was characterized by many and very strict lockdowns and curve years, the order growth has basically returned to a very healthy structural growth in all of the regions. And also in MENA, all our meaningful restrictions have been lifted, although it was only at the end of August when it was the case in COVID. In the meetings that we have had with you in the last month, we have often been asked about the quality of the cohorts that have acquired during the pandemic. And for those customers we acquired in Marsh and Apple, we have now at least half a year of track records so that we can now start to make some first assessments and solid analysis on their behavior.
And what we see is that their behavior is at least in line with all the cohorts, which is obviously very encouraging. We continue to expect that this situation due to COVID has rather accelerated the structural shift to more online ordering of food, but also groceries and that most of the current effect will have a permanent and therefore positive impact on us. The average order values also in line with our expectations have gradually retraced to our pre COVID levels in most markets after the immediate effect of lockdowns as we see the end customers, partly went back to work and have had more of an ability to do grocery shopping themselves. So now let's move to our first segment on the next slide and start with Asia. So here, I'm happy increasingly challenging comparables, the segment posted order growth at 178% year on year.
You also see here a significant increase in the share of on delivery orders, which account for 70 8% of orders in the quarter compared to 55 percent a year ago. The revenues were almost as much with 100 and 62% on reported basis and with 170% on a custom currency basis. We also kept pushing for operational improvements and the overall delivery time improved by 14% year on year at now 23% 23 minutes. In Korea, we are invest we invest in our own delivery service and also leverage our technology to that extent and being able to deliver in 20 minutes versus the usual 30 to 35 minutes. Now let's move to the next segment, MENA.
So as you know, MENA has been impacted by very strict lockdowns in curfews and that the results of this even show negative year on year growth of 6% in the last quarter in Q2. But in Q3, our operation had a very good recovery from this and generated a lot of growth of 40% over Q3 2019. And again, this is despite the fact some of the countries, part of the quarter was still difficult with restrictions still prevailing. And here, I'm thinking about COVID. GMV grew by 30% on reporting currency and even 44% on constant currency basis.
The revenue went up by 27% and by 38% if I just seen from the adverse effects coming monthly mostly from the Turkish Lira. So now let's move to the next slide and show the development of our European operations. So So our Europe segment has another very strong quarter with actually the strongest order growth since IPO. Well, the order grew by 55% and thereby nicely accelerating sequentially after already 47% growth in the prior quarter. And we believe that have been our outgrowing competitors at least in overlapping markets.
GMV increased even stronger by 65% and revenues went up by 88%, thanks to very good customer acquisitions and also improved cohort behavior. So now next slide, Americas. Americas had the 2nd quarter with orders more than doubling, having grown by 100 11% in Q2 already. Q3 came on the same level with order growth at 112% year on year, and we continue to see clear acceleration. So the segment showed a similar strong jump in the share of on delivery orders at the Asia segment.
The OD share is now standing at 76%, which compared to 49% a year ago. The GMV of Americas went up by 130% on a reporting basis and even by 149% on customer currency base, as as far we know, the fastest growing LatAm food delivery company. The revenues increased by 157% and even by 178% if adjusting from the headwind from FX FX. And here again, the revenues as well as the GMV for Americas have been impacting by the application of the year as 29, means the hyper inflation accounting for Argentinian operations. And this came to play, as you remember, this came to interaction since September 2018.
So the impact of this, considering Argentina as a hyperinflation country, was a negative of €6,000,000 in Q3 2020 regarding GMV and a negative €1,400,000 in terms of revenues. Finally, let's move to the the integrated verticals segment on the next slide. As you all know, the segment captured the activities where we are operating as kitchens that we operate. And as a reminder, the integrated vertical orders and GMB shown here on this slide are only shown for illustrative purposes. We are currently accounting for in the platform business segment as it is on the platform business infrastructure that the order and also for the Demart have been placed.
So the rapid expansion of our Demart business contributed to a strong order growth of 64% quarter on quarter and GMV stood at EUR 54,000,000 in Q3, up 41% compared to the prior quarter. Decline in in the AOB or average oil value is due to both the strong expansion of PMOS, but also the end of than rollout of new Dmarts in Q3, hiding 106 such warehouse after 44 new Dmarts in Tier 2 and ending the quarter at a total of 254 Dmarts now active. And we still expect to reach our plan, as Nicolas mentioned, of 400 demarts by the end of the year, despite challenges to open stores during the COVID. So, so far, the review of the operated business for the past quarter. And now let's unveil the underlying profitability of especially on delivery business in the case study that we prepared on the next two slides.
So what we are showing now on this slide in the 2019 is the contribution margin as a percentage of GMV for our own delivery business. And obviously, it comes as no surprise that you operating a profitable marketplace business is a relatively easy endeavor. It is the own delivery business where the going gets tougher and where you need to decide if you really want to do it or not. Because doing it half headably and without conviction will only result in very mediocre result at best. So we have to decide for ourselves a few years ago or a few years back that putting in place superior last night logistic capacities will pay out at the end.
And now looking at the lines that you see on the charts and the numbers behind this, we think this is clear that we are now seeing that the decision is starting to pay out nicely. We are now earning money for each incremental order that is being placed in any of the 4 regions. And while MENA has been possible for many quarters now, we are super happy to see the improvements made by the other regions. Americas and Asia have both shown shown a particular strong improvement in recent quarters and both are basically profiting from the economies of scale and the constant improvement in the best practice that we've been implementing across the group. A large part of this improvement has been due to delivery cost reduction, thanks to a better utilization of the rider sleeve, but also overall efficiency gains in various areas such for example for the contact center in the Americas.
In the Asia segment, we have seen the investments in the form of free delivery campaigns for a good part of 2019 that are now contributing to the order and the revenue growth, as shown before in the segment presentation, thanks to the customer we have acquired during this phase. And finally, and to counter to sometimes worse assumption that on delivery only works in countries with a relative low cost structure, we find it very encouraging to see that also Europe is already well in positive territory. Find and implement efficiency gains whenever possible. So as we are also well aware that many of you also personally about the level and impact of the vouchers or generally speaking revenue reductions, we are using as part of marketing to attract new and retain and activate existing customers. For AMP, we have gone a step further and have on the next chart shown the same data as the deducted cost of this marketing tool.
So what you see on Slide 20 is that also with this even more conservative view, 3 of the 4 geographic segments are already earning money on own delivery orders. Mainland Europe and Americas are all in positive territories. Only Asia still need to go a couple of more steps into that direction. But looking at the improvement of the segment
has made
in the past quarters, the direction is clear. Also using this opportunity today to give an update on how we see the usage of vouchers. In 2019, we saw a peak in the use of these marketing tools, as you can see on the right hand side of the of that we've seen in H2 last year, and we're expecting a further decline of that we've seen in H2 last year, and we're expecting a further decline from here until the end of the year. But to avoid any misunderstanding, we're still considering vouchers and similar incentives to be a very productive tool to promote the usage and also the first time adoption of our service.
And
they will continue to be part of the tool set going forward. But they are centralized and data driven approach that we have allows us to ensure a high efficiency in our marketing and a good return on our investment. So before we take your question, let me give you an update on outlook of the current business here on the next slide. So as Mikaela pointed out already and on the back of the very strong operating business performance for the 1st 9 months of 2020, we are again increasing our outlook for the full year 2020 revenues. In July, we raised the total segment revenue guidance to a new range of €2,600,000,000 to €2,800,000,000 up from €2,400,000,000 to €2,600,000,000 before.
And we are now confident to come out at the upper end of this range and are therefore changing our guidance to a range of €2,700,000,000 to €2,800,000,000 The outlook for the adjusted EBITDA remains unchanged. And here, we continue to expect an adjusted EBITDA margin of between minus 14% and minus 18% as a percentage of revenue. We have stated that this guidance, excluding our additional investments, what that we intend to utilize for or to defend our leadership in selected markets where required. And in July, we have specified that, that amount to be up to €150,000,000 and therefore, less than the up to €200,000,000 we had reserved for this going into the year. And today, we are reducing that number again up to EUR 220,000,000 that still including between EUR 20,000,000 and EUR 30,000,000 for the launch in Japan.
So these are the change to our guidance, we've otherwise stayed unchanged. So that was it from our side. And well, we are now looking forward to your questions. Thank you very much.
And the first
Two from me, please. Firstly, with regards to those additional investments, you've obviously now nudged that down twice and you've also added in Japan. Can you talk a bit about why you're spending less than your originally stated upper end? Is it to do with more benign competition? Or just a little bit more color around that would be great.
Then secondly, with regards to contribution margin slide, thanks very much for scoping this. It's absolutely fantastic. A couple of questions on it. Firstly, how much benefit is there in Q2 and Q3 of 2020 driven by COVID? And secondly, do you believe that Asia and Americas can get to the meaner level?
And if so, how long will it take? Thank you.
So I'll start with the first one. So when you enter a new year, you don't know how tough the competition will be. And we expect it will be a very tough year in many regards. I think it turned out that most competitors back a little bit or went a little bit more towards economical side, profitability rather than grow at any cost. So that's why we didn't feel like we a need to invest the full amount but pull back a little bit on investments.
I think most of the investments that we did was rather opportunities that we saw that had very good returns and only some of it was driven by comparative we see that we actually increased leadership in 6 countries this year, and we have lost leadership in no countries this year. So it's a net gain of 6 markets that we gained leadership organically. I think that also points us to direction that you have done many things right. And then maybe Emmanuel, you can
cover the second question. Yes, sure. So on the contribution margin, if you look at how much benefit we get in Q2 and Q3 from COVID, I think like MENA, obviously, we didn't have so much benefit as you know because many markets have been impacted by COVID and restriction in COVID. So here I think COVID was not a benefit but a slight negative for the segment. The other one, I would say, if there is any kind of benefit of COVID, this is not the full story behind it.
Mean, we've been working on the decrease of the CPOs, of course, per order, working hard on efficiency gain in terms of logistics, but not only. I mentioned before the contact center and so on and so forth. So I think this is much more the trajectory of our efforts to improve this unique economics that you've seen. So I think if COVID and it's difficult to quantify, there may be a positive impact for 3 of the 4 segments, but definitely not for MENA. But I think the curves that we're showing you today are much more the consolation of the efforts and the that you've done over the quarters.
And as I said, efficiency gain in terms of CPO, but also like your other of it. Where can it go now from here in Asia and Americas when you get to MENA? Yes, I mean, that's a $1,000,000,000 question. I mean, we think we can still improve. I mean, like this for sure, I mean, we'll continue to work on this and there will be gains in terms of efficiency, but also we can focus on how could we maximize our revenues.
Will we get to the main level? That's too early to say. This is a challenge, but this is, I think, too early to say. And also how long will it take? So but we will continue to work on this, to improve this and to push this curve as far as we can.
Excellent.
Thank you very much.
And maybe to clarify, moving to MENA level on gross profit to G and D, that we will do. The question is how high will MENA be at that point in time. So we also expect to improve MENA segment gross profit to G and D. So the question is if we will catch up in the long term to the same level, but we will surely reach the MENA level as of today.
And the next question is from Giles Thorne, Jefferies. Your line is now open. Please go
ahead. Thank you. And the first question was again on the profit contribution for owned delivery. And I suppose it's really a question about the limits of the business model really, so quite a high level question. But you don't have to look too far to see the groundswell of change towards labor regulation and the news out of Korea about your riders becoming salaried employees is just one of many, many, many examples.
So it's my understanding that the improvement in your profit contribution per order thus far has mostly come from the efficiency level rather than anything else. So my question is, if you see input cost inflation around the rider costs across your entire business, how much do you think the other levers of delivery unit economics, namely the basket size, the delivery fee, unit commission, how much do you think those can absorb any input cost inflation? A discussion there would be really, really useful. The second question was a question actually I asked at the Q4 results, and I'm going to ask again now with the benefit of an additional 6 to 9 months of trading. And it's around the conflict of interest between a merchant partner and dark store concepts in quick commerce.
And the question is really prompted by again news flow out of Korea where we've seen the Convenience Trade Association start to moan about cannibalization of delivery orders by dark stores, not yourself. It's actually WUWA thus far.
But anyway, how do you
manage that conflict of interest? That was it. Thank you very much.
Cool. Hey, thank you. So I'd quickly cover those two questions. So yes, the improvements have been mainly through efficiency. So we haven't really increased any fees or delivery fees on a more than potentially marginally, but in generally not the main lever is rather on the rider efficiency.
I think there is still a lot of efficiencies that we can do. There's still a lot of improvements that can be made on reducing delivery distances and having less wait time, etcetera, etcetera. And it really comes down to the details. It's an enormous amount of detail. There's 100 things to be done to improve there.
Then, of course, if labor regulation in some countries will go to a less optimal setup, and I really say less optimal setup because this is not a setup that riders want. In such setup, they will make less money, but and they will have less freedom. It's so it's really a lose lose for the riders, and riders don't want it. There will also be much less riders working because we are then in control of efficiency rather than they themselves control efficiency. And if we steer efficiency, we it's not necessarily good for restaurants either.
In the end, our platform needs to make money. And we are not charities. So in the end, we will have to make money. And we will have to adjust. And if there's something that is increasing the cost level and making it less efficient, then of course, someone has to pay for that inefficiency.
And as I said, it cannot be the platform. So therefore, the loser will either be the user, the restaurants or the writers. And unfortunately, I think there will be all the 3 of them. We would have to cover this cost. So it would be very unfortunate really.
I know the question if you make money on ODs is a little bit half ridiculous in my view because it depends how much you charge. I mean, you can charge more delivery fee or you can charge the restaurant more. But of course, I mean, you might take down growth marginally by doing so. But there's plenty of room. It's just where you set the level.
Then when it comes to emerging, I know the partners and the demarts, yes, I conceptually get that conflict, and I think there's a very easy parallel to draw. But if you look at it from that way, we're working with 30,000 partners, and we today have 250 DMarts. The DMarts are only there to cover something that those partners cannot do. They cannot do fast delivery. They can do fast picking, and they have certain suboptimal setup for delivery.
So it's not that Demart is taking over for the grocery aspect. Demart is taking over for the emergent need of getting something small delivered to you. And no grocery in the world would do what we do with the Demart because that will not be cost efficient. It will not make any money. So we take a loss making part of their business, make it profitable and make it possible what they cannot make possible.
So it's not really cannibalizing anything on what they do. It really solves something that they cannot solve in that setup. We would also be happy if they would be the owner of this demarts and use it as a franchise for some time. But right now, we are doing it in we are taking the risk and we are doing it right now. But that could also be a solution for the future.
And also, we do not prioritize our Dmarts. We will on our customer's shoes because it's faster and any grocery store can try to do the same.
So the Merry Maid agreement you've got in the Philippines where they are actually going to own they're going to own the dark store, do you think will we see a lot more of that?
I think that is a possibility. I know in the beginning, we want to optimize for perfection in the setup and do all the learnings. So in the beginning now, we feel like we are the right owner to make sure we have that full flexibility and control. But there is nothing that we could or would consider this as a franchise model, where we give them the tools and the possibility to build their D Mart, and we are the agents here. Thank you very much.
Thank you.
And the next question is from Sylvia Konyl, Deutsche Bank. Your line is now open. Please go ahead. Good morning and thanks for taking my questions. The first is about the upgraded revenue guidance.
If we take the midpoint, the implied segment revenue for the last quarter would be 75% year on year, which means a marked deceleration from the rate year to date of 95%. So can you please discuss if there is any tough comp effect that could explain this? Or whether you are seeing a second wave of COVID not having as much of the positive effect on order in some markets? And then my second question is just on the partnership with Mastercard. Can you please discuss the vision around adding payment solutions for customers?
For example, is integrating these services a way of making users and perhaps drivers more loyal to your apps? And if you could comment on whether your peers are also already doing something similar, I think, RAPPEs? Thank you.
Manuel, do you want to cover?
Yes, sure. So I think for your first question and taking the revenue guidance, I think it's fair to say that with this very special year that we are facing and it's not done yet, we will learn certain there is a certain certainty how their the change of COVID dynamics will have an impact on the business. And when you look back in Q2, the impact was very different comparing the regions. So if you compare MENA to Asia, for example, and then taking this experience, let's say, obviously, what you've seen in the quarters, we remain prudent for the, let's say, for the next quarters. But think it's fair to say that so far we've been happy with the start of the quarter.
On the second question on Mastercard, I mean like the deal is going to be a deal where we have some financial aspect to it, obviously, which is our which I can't give too much details today due to the close that in the contracts, but this is very interesting financial contract. And on top of that, we will also foster we have some collaboration on the technical part of it. And the benefit would be for the ecosystem as a whole. So in the first place would be customers, but also our riders using the wallets and all different kind of products that we want to develop with Mastercard. So that would be for the benefit of our ecosystems in the region in MENA.
So we will disclose probably more details as we're are going to launch these services or these new features, but this is a benefit for riders, customers and also vendors or restaurants. And that's the spirit of this deal with Mastercard, but we're super happy to have Bridge, which is one of the largest Mastercard deal in the region ever.
Maybe add a little bit on the revenue guidance. And we also compare it to a very, very tough quarter. And in that quarter, Asia grew at 2 61%, up from 211% the previous quarter, 114% in the quarter before. And Asia taking a bigger portion of that back then in end of 2019. So we are really comparing to a very, very strong quarter when we doubled down on affordability and other measures which we saw before.
So it's really a function of size and scale. The other aspect also to keep in mind is FX. So we have seen euros strengthening a lot lately, which also impacts our revenue on a reported basis negatively. On a constant currency, obviously not, but on a reported basis, that has also contributed to that. So I think we had a great start of Q4, but we'll be comparing to a very tough quarter.
Thank you. Thanks. And the next question is from Andrew Porches, HSBC. Your
Just echoing thoughts before, the detail on the contribution side contribution margin side is very, very helpful. But with the detail you've given, I'm just wondering sort of what the thinking about the sort of the move from pre voucher to post voucher. Have you got any experience of consumer behavior as you reduce vouchering? I'm just trying to understand really whether there's a risk that the positive impacts of reducing vouchering may be partly offset by a drop back in efficiencies or such as frequency or basket sizes as some of that subsidy is removed from customers? And then secondly, I know you talked previously a lot about more rational competition.
And I'm just wondering if that's something that you continue to subscribe to and whether you feel everyone in the industry has been benefiting from some of the impressive trends we've seen at the sector level or whether you think you've been benefiting sort of disproportionately and extending your leads in a lot of markets?
Sure. So maybe I'll cover. First, I mean, most of the parts we do is try to target to new users, but of course, it's very hard sometimes to target new users. And we have also done at some occasion platform wide free delivery campaign over a week or 2. But usually, we try to make these vouchers very small because when you give someone €10 to order, they will not order because they're hungry, they just ordered because they got a good deal.
If you give someone an a €57,000,000 to €1,000,000 or €2,000,000,000 maybe at the max, they don't order because they just got that. They kind of I don't know, they use it, but it was not the main driver of the decision. And that's why we're seeing that the behavior of these customers have been very similar to other customers. I should say that it's a little bit less, but it's still not as material as people would think or what has been communicated in the market. Even if there would be a slight impact of reducing vouchers and so on, and we're still going to grow very, very fast in these markets.
So I don't think there will be an impact on efficiencies. So we'll keep on driving efficiency from larger scale even if a percent or 2 would be falling from our less purchase. What also means is usually that you have a slightly better basket. So if we give some of free delivery with no restrictions on basket, they might order something very small. If they pay a delivery fee, you usually add 1 or 2 extra items because you don't want to order anime for next day, maybe order a meal for next day as well.
So you see generally that the basket usually increased a little bit, which is then also beneficial for us. So therefore, yes, we don't expect much there negatively. In terms of COVID, some markets have been more affected positively. I don't see U. S.
Being absolutely booming, similar we're seeing in some Nordic markets. We have also seen similar actually now in Europe, in general, we have seen a clear uptick in at least some markets, some markets being more neutral. That's in America. You've seen that's probably a positive impact as well. But I think but that's a small segment.
I think proportionately, we have been less impacted or less positively impacted by COVID than, in particular, our American colleagues, where also baskets drastically increased as we've seen. I think the positive is that when if COVID goes away and hopefully soon, we will also not have as much of a drop when that happens if there is some degree of drop. And I think there will be some degree of drop with behavior, but we will be less impacted in that case. In terms of the markets we will operate, we have definitely been if it's COVID related or not, but we have definitely been taking market share and been winning market shares. I think that is with or without COVID.
That is also our clear not ambition, but our commitment, and we will continue to do that also going forward.
Andrew. And the next question is from Markus Sibal, JPMorgan. Your line is now open. Please go
Yes. Hi, everyone. Yes, I would also like to echo previous comments on increasing the reporting, particular when it comes to contribution margin. So thank you, Emmanuel and Daniel, for doing this. One question I think that comes up is now what happens below contribution margin.
I know you're not going to guide on EBITDA profitability per se, but if you could maybe give us an indication, I mean, what needs to happen to also turn positive at the EBITDA level. You're growing at 100%. You were highlighting that the returns on investments on new investments are coming down. So that leaves largely the, I guess, marketing angle left as a variable. So how shall we think about this?
Or at least, Michelle, we think that it will also continue to follow the contribution margin gradually? Or can we get can we or do we need to expect some hiccups on anything below contribution margin? That will be interesting. And then 2 more questions, very short. The first one on global, you bought the stake from Amres.
Maybe you could tell us a bit more why that is? I understand the LatAm situation, but why increasing the exposure with global in Europe? And then thirdly is on the delivery share. Could you just tell us a bit more where do you think this share going in the next 2 years? So it seems to you clearly follow the Chinese example in terms of a high share of delivery share.
Where do you think this is going to go in the next 2, 3 years in your portfolio? Thank you.
Perfect.
Yes, no, we expect any hiccups on anything below that. But Manuel, maybe you can elaborate a little bit there.
Yes, no, absolutely. Yes, we don't expect any hiccups below profit contribution. I think the our focus still is on growth. I mean, like you've seen, we're doubling the company. So right now, we're still focusing on improvement of contribution margin that you've seen today.
And we will continue to focus on improvement of the contribution margin and with the scale, APDASH would then improve. But that clear focus is now still on growth. We see the potential. We also see the potential not only in regions that all of us were, I think, agreed on in Asia, but also now LatAm and also Europe are going extremely fast. So still, I think we will concentrate on growth, while also continue to improve our unit economics.
So I think that no hiccups obviously below to be expected.
Then of course, market launches. When you do that, you have to scale up. So Japan is one example, but there are a few other cases as well. Same with New vertical, of course, that is something that is very early stage. We are not at mature stage.
So you have to build the teams, the setups for this. So but in our core, no hiccups there. Then Glovo, yes, yes, we are very happy with Glovo is achieving. We also see that it had a very strong execution. So we are very happy with that investment, and we like to keep supporting that company.
We are, of course, further increase further increase our stake based on the belief that we have. Then on the delivery share, I think there are markets where we see that there is a strong difference between of clear difference when we deliver versus when the restaurant is delivering, both in terms of inventory, but also in terms of quality and speed and cost. And in those markets, you would expect that delivery to go to 80 or even more. Then there are some markets where the difference between on delivery and marketplace is very little, in some cases even negative that the restaurants find ways to even delivering things equally fast at a lower cost than what we can do and every restaurant is delivering. And we have no urge to them building delivery for the sake of delivery.
So therefore, some markets will have a significantly lower share of OD. And then, of course, the combination of that is making the mix. I think, yes, so therefore, we will continue to grow, but maybe not as fast anymore. Maybe in the markets where we do not do delivery yet because we see that the restaurant is doing it equally good or even more cost efficient. As we improve our delivery efficiency, we may at some point even come to a point where we can do it even cheaper and even better than they do.
And of course, at that point in time, we will also move OD to probably 80% in those markets as well. But for the time being, that's not the
case. Okay, great. Thank you.
Thanks, Markus.
And the next
Andrew, mute.
Andrew Ross, we can't hear you at the moment. Perhaps you're is from Sherry Malek, RBC. Your line
is now open. Please go ahead. Good morning. Thanks for taking my questions. Firstly, just to follow-up on the unit economics for own delivery and how this can improve further.
I understand there's still a big opportunity to improve the cost per order. But how would you rank the other levers, so basket size, delivery fee and take rates in terms of their potential contribution to improving profitability longer term? And then my second question is on Asia. Basket sizes have continued to decline, I believe, due to the accelerated mix shift to own delivery, where AOVs are lower than marketplace. How have you managed to offset that such that you can keep to the EBITDA guidance?
Has the operating efficiency come through higher than expected? Thanks.
Maybe I'll cover the first and you'll cover the second question. So it's I think out of the things that you mentioned, I think take rate is or commission rate is probably not a lever that we want to pull. We don't think it's necessary. So that's probably a smaller delivery fee. And we have been very generous towards the consumers, so there's maybe some a little bit room there.
But I think that's the last lever we would pull. And then basket, yes, I think also there is some room for upside and so on, but also not huge. I think that by far the biggest lever is that we can still improve our efficiencies, making less waiting time, shorter delivery distances, yes, how we manage the fleet, onboarding, etcetera, etcetera. So therefore, that's really the lever we want to pull. Of course, the other levers we can also pull, but we don't really see a need and that is really the last levers that we would use.
And as long as we have the big levers in efficiency, we will probably not pull many of those.
And I can cover maybe the basket size as you're from Sherry. So basically the basket size, we have to keep 2 things in mind, I guess. The first one is the evolution of the year. So with COVID, we mentioned this. I mean, like that people going back to our COVID in Asia been less severe in Q3 than Q4 than Q2, then you have maybe some impact on the basket side as people are ordering now maybe more GDP structure.
And the countries that are going faster than GDP structure. And hence the countries that are going faster than others have sometimes a little lower GDP than in general and hence the basket size is lower than you would have seen in the future in the past due to this market mix effect. You will have the sense that the basket size is decreasing a bit in average. On the other hand, this doesn't impact or shouldn't have no impact on the EBITDA itself for the each country, so the basket size impacted by the market mix, but the EBITDA should not. Does that make sense?
Yes. Thanks very much. That's really helpful.
I think we cut off Andrew a bit earlier. So if I may say, we will take Andrew Ross now for the last question and to all the others we see in the queue. Sorry, we are running out of time, but Chris and I will get back to you after the call to answer your questions separately. So Aurelia, if you can let Andrew in, please.
Sure. Andrew Ross, your line
is now open. Please go ahead.
Thank you. Can you hear me okay now? Yes. Sorry about that. Thanks for squeezing me in.
I've got 2. First one on the WUWA, Nicholas, I think you said that the GMV in Q3 would been $6,200,000,000 had to be included Roover, so we can back out, but Roover was $2,800,000,000 And when I look through your presentation, that looks like it's growing about 65%. So A, is that number correct? And B, can we kind of assume that a sensible run rate for the 9 months? And if you can give us as to how much is growing would be great.
And then the second question is on Demarks. Obviously, you're targeting 400 this and I appreciate it's early to know what might happen next year. But could you give us a sense as to how many there might be by the end of next year?
Yes, I think your math sounds very good, very sound. And I think that, that will be growth in euro terms that you would refer to. I think if you look at Cream 1, it may have been a little bit more even. But it sounds like reasonable assumptions that are made there. In terms of Demart, given that we are very committed to when we say something that we get it right.
I feel a little bit hesitant to share that. We're still working on that plan. We it's still early days. We have to figure out in which area we where do we have the size and volume in order to justify demark, where can we drive it profitably, where do we see the volume coming, how much volume is going to drive it. So therefore, I don't dare to say anything at this point in time more than the fact that we remain bullish and they're going to continue to grow very fast, how fast they'll be seen.
Thank you. Thanks, Andrew. And many thanks, everyone, for your continued support and trust. We'll be working day and night to make sure we deliver on our commitments. And then also a big thanks for the team doing an absolutely incredible job.
I'm super grateful to be part of this incredible team. Thank you, everyone.
Thank you, everyone. Stay safe. Bye for now.