Earnings Call: Q4 2020

Feb 4, 2021

Thank you very much. Hello, everyone. Welcome to this very first quarterly earnings call for CDN of a separately listed company. This is a big day. It's a big moment for me personally. And I'd like to start by thanking you all for your interest in CDN and our journey. My name is Jesophe Bellihariu. I'm the CEO of CDN since a few years back. And with me in the meeting, I have our CFO, Niklas Seager. And it's also been with me during the last couple of years, where we have been working to transform a 20 year old retailer into a marketplace and a tech provider. For me personally, throughout my career, it's always been about how to make the meeting between a buyer and a seller as smooth and as convenient as possible. Why is this important? Well, it's important because it generates value for everyone involved. And the buyer will get his or her problem solved, and the seller will sell more, and everyone is happy. And I joined CDON in 2017. That's a little bit over 3 years ago. And I was amazed because I saw a rare opportunity to actually go and build a company that could improve this meeting between the buyer and the seller. I joined CDON in an age where there was available technology and the right competency to go and do this. In 2017, CDN was just a shell. It wasn't really much to me because it was retail. It was a business model that I had tried for 20 years, And I failed so many times that I also saw that there were strong assets in the company that could be used to create this vision of the perfect meeting. Fedon had a very strong and known brand since many years in all of our markets. It may well be that we were known for being CD records online, But it was very well known in every market that we operate. We also had a huge amount of in house competency about e commerce, and I was actually shocked about this fact, that was one of the first things I talked about with my friends after joining CDON. I came from Dasti, which is a very strong Nordic e tailer. But when I came to CDO, pretty much everyone knew a lot about e commerce, and that impressed me. We also had a lot of active customers in attractive categories. We had existing product sales volumes, And those gave us insights on customer behavior and product mix trends. And we had this fantastic core letter domain that have been worked on for 20 years, CDON. And those short domains are not easy to get these days. What we didn't have back then was a profitable business model. We didn't have the sufficient technological foundation. It was Old platform from 2,008 built for retail. We didn't have the right culture. It was very hierarchic. Few people took many of the decisions, many people made work dictated by few people and we didn't have the optimal ways of working. So this is where we started. This is what we started to change. If we fast forward 3 years, We have accomplished a lot. We've turned the business model. We have improved the financials. We've changed much of the technology, and we have improved our culture and ways of working. But now the real work begins. If you move to the next slide please, Slide 3. Today, Fillon, we have over 1500 merchants selling their assortment on our platform. The majority of these retailers or merchants are local Nordic retailers. Some are smaller, some are bigger And they come to us for different reasons and with different reasons. To give you a couple of examples, we have a partnership with a Major Danish retailer called Computer Science. They needed support in their presence and reach in the Swedish market and very, very soon in Denmark Another company, Vines, I've known them for years. I worked in IT. They're very strong in IT, specifically surrounding gaming. But when they joined our platform, They didn't need to reach a new geographical market. They just wanted to reach new customer groups outside of the specific gaming niche that's in their core market. We have different merchants with different needs, and our job is to serve these merchants the best we can with our technology and our people. They can jump up in this. And when we develop our future offering of technology and commercially, we do this in collaboration with our merchants With the constant dialogue, we should bring that to end of that call. I'm not taking Going forward, I expect higher inflow of European merchants as we're looking to more partnerships with different European marketplaces to ensure a wider and more relevant If we move to the customer side on next slide, which is Slide 4. During the year, we've seen strong growth in number of active customers. The prospective customers are customers that have made a purchase with CDN in the last 12 months. And right now, more than 10% of the Nordic population of buying age From different merchants, they can get an e mail when something missing is back. They can review price development over time, And they can give talks in what to buy by looking at rate from some other users and also lead their own rate to company, All of these functions are actually functions we have added since we launched our new platform in Solver. And here is an area where there is a great opportunity in further developing our own private experience. If we move to the next slide, which is Slide 5. As I mentioned, we have a strong number of New customers joining our platform, strong number of merchants joining our platform. And these merchants and our customers Investing commerce, as they should, we grew our gross merchandise value in the platform by 60% in Q4. And this, in turn, generated an increase in adjusted EBIT by 21% to SEK 28,000,000. This year has been a year of strong transformation for us, CDN. The biggest event for us was obviously the launch of the technical platform that I mentioned We don't see demand of October, yes. But you're right, people see that. And I've been asked the question whether we're It's vital. But the trick with this new platform is to see this with the maximum amount of data. And during the peak season, our data amount is high. The platform which we develop ourselves is built specifically for our market It's lower than the old legacy platform we had since 2008 that was built for a retail model. And this new platform is very scalable, It's highly automated, and it's the right technical foundation for us to grow on in the coming years. That's why we prioritize to put this in during the peak season. When we look back at Q4 2020, I am so proud of the team because we are putting a very, very strong year for CDNBI. If we move to the next slide, Slide number 6. We talked about marketplace when I joined CDN 2017. It was on the PowerPoints. But we didn't really go for it. During the last couple of years, we really went for it. And we have established ourselves as the leading Nordic marketplace at scale. And during the last couple of years, it went much faster than many anticipated. But we're super determined because we see a great opportunity here. If you're looking at trends Global trends or even European trends, Marketplaces account for over 50% of the total e commerce revenue globally and has a much higher penetration in more mature markets. And we saw with this business model, in a Virtually undisrupted market, we could make a real change and take a leadership position. We're building this on 20 years of knowledge and mistakes, And we build this on 20 years of knowing our market. We are willing to tailor our solutions to meet the local needs, And we take the merchant need as well as the consumer need seriously because we want to take the experience for Nordic consumers and merchants to the next level. If we move to Slide 7, I'd like to talk a little bit about market position. The Nordic market is a promising one, but it's a tricky one to operate. There are not that many people, euros 28,000,000. And those SEK 28,000,000 are spread across 4 nationalities and cultures, 4 different legislations. It's a logistical nightmare. You have mountains in Norway. You have rivers. You have seas. It's far distances. But then again, we are the 5th largest economy in the EU, And it's a perfect market for e commerce because the Internet penetration is over 90%. We're having some of the richest people in the world, And we are known to be fast adopters on new trends. Despite all of this, The online penetration or online sales penetration is actually lagging behind many other European markets. And when it comes to market based penetration, we're even more far behind. In my belief, this will change over the years to come as it has done in now, instead of mature markets, and we as CDN would like to take a prominent position in this change. If we move to Slide 8. If there's one word to summarize 2020 for Nordic retail, It's got to be change. I think everyone can feel it. COVID-nineteen pushed a massive change on our retail industry, And it demanded Agility at an unparalleled level. So the quickest ones to adopt to new conditions were the ones that made it the best. It was a rapid change of sectors. Travel died instantly, And some sectors boomed like do it yourself and near home product. Everyone started to look after their castles, decorating their homes, building that decking that they've been dreaming on for the last couple of years. And all of a sudden, they had money to do it because no one could travel. But all of a sudden, e commerce wasn't just a convenience. It was a necessity. Because of the social distancing, you had to buy online, which meant that new customer groups were forced to go online. So we could see in our data that elder groups were picking up because all of a sudden, they had to adopt this new technology and this new way of shopping. Another major impact for us during the year was also the launch of Amazon. Se. That has been a big unknown, rumored since 2018. And finally, they entered to show their true nature. All of a sudden, every single retailer in the Nordics had to ask themselves the question, should MarketPlace be part of my go to market strategy? The other question they must have asked themselves was how do I become more digitally capable fast enough? And what should my role be in this new environment? We have a purpose, and it became more important than ever during this year in trying to help the customers and merchant dealing with this change by utilizing our precision technology and experience. If you look at the marketplace flywheel on this image, it is an L against business model because it's asset light, it's capital efficient And it can handle scalable growth with less risk, much better than traditional retail. We know it because we've tried it. We've tried both. But it's also able to generate true customer and merchant value if it's executed correctly. Instead of purchases managing aging stock, administration of staff that handles product content and pricing, We can now employ some of the best developers in the market, and we do. And we put that attention to helping our merchants and customers instead. We have large volume, more volume than our merchant, so we can drive traffic to them at competitive costs compared to other channels they use. And we have many products. We have millions of products, 10 times the assortment of the local retailers. And with so many different products and offers in one place, we can serve the customers more efficiently, And we can be more accurate in doing this because we get all the insights and the data from all those products and all those customers. With that said, there's a lot to be done. This year is going to be a specific focus on customer experience because, as I Said before, it's a new platform. We still have a lot to do to kind of trim and optimize it, but the focus will be on the consumer experience on the platform. We also need to work with things related to that, like operational improvements. How do we obtain structure, utilize available data in a more efficient way? The technical foundation, sure, is established, but we need to trim and optimize. And when it comes to added value creation, this Flywheel or business model, it has some interesting avenues left to explore. We're looking at advertising. We want to build more merchant insights to help them sell even more, and we want to look at further integrations to support our merchants because we know that this is an area where they're struggling right now. These services are requested by our merchants and these services they're willing to pay for. We have also the benefit of being fairly late in the game. We can observe others, larger players, more mature players than us and see what they have learned and pick the smartest options. We can avoid the pitfalls, and we can invent solutions that not only solves the problem, but source it smarter than the current solutions in the market. So taking the unimaginable and making it common, That's where I would like us to be as an organization. Those On my words, I'd like to hand over now to Niklas Teager, our CFO, to talk a little bit about the numbers that we've generated. Thank you, Christoph. Starting on Slide 10. On this slide, we can see the transformation that CDN has gone in the past years. Not only have we built a marketplace with 3rd party sales that have grown very, very fast, We have also successfully phased out our CDN Retail business. Looking at the quarter, we can see a continued strong growth GMV growth from CDN Marketplace amounting to 60% or total SEK 641,000,000. CDR Retail further accelerated outphasing during the quarter and declined GMV with 48%. Moving to Slide 11. The strong GMV growth of 60% from CDN Marketplace resulted in a net debt of SEK 75,000,000, an increase of 41% And our gross profit had increased with 45%. The commission for merchant grew nicely with 76%. However, lower advertising revenue is the main reason for gross profit not growing as fast as GMV. Full year GMV growth from 3rd party sellers amounted to 86%. This growth is mainly driven by successful integration and onboarding of new merchants during, I would say the second half of twenty nineteen and twenty twenty and of course, favorable market conditions. CDR retail declined with 60% net pay, But we saw an increase in gross margin as the remaining of the business have a higher margin structure. As a result of the rapid change in business model, total net sales declined with 38% in the quarter and 28% for the full year. This, of course, also impacted our gross margin as we see increasing very high margin third party volumes, and we reduced the lower margin retail business. This resulted in a gross margin that increased with 15 percentage points and amounted to 35%. We are very pleased to see a continued positive profitability development. We now have 11 quarters in a row with improved profitability compared to the same quarter the year before in terms of EBITDA. Looking at the quarter, EBITDA grew with 21%, amounting to SEK 28,000,000. And for full year 2020, adjusted EBITDA grew 126 percent to SEK 34,000,000. The costs adjusted for are related to our NASDAQ listing and incentive program from to management, which in total amounted to SEK 10,100,000. Adjusted EBIT was SEK 23,000,000 in quarter. And for full year, EBIT was SEK 4,000,000, which includes a write down of intangible assets of approximately SEK 7,000,000 during Q1 2020. If we move on to Slide number 12, and we look at some of the drivers of our business. We saw a continued high inflow visit during the quarter, which is following the same pattern as we've seen throughout the year. Lower conversion rates resulted in a 16% growth on number of orders. During the quarter, we also saw a decline in average order value, which is mainly related to lack of supply within certain high value item categories during Christmas period. We are very pleased to continue to see high inflow of new customers to our platform. By the end of the quarter, we had 2,250,000 active customers, which is a net increase of approximately 500,000. Moving on to the next slide, the cash flow and the balance sheet. As a result Of retail being phased out, we continue to decrease our inventory. And per the end of December, it amounted to SEK 25,000,000, of a separately listed company, which is a decrease of 76% versus last year. The cash flow from operations during the seasonally strong quarter amounted to SEK 130,000,000, which is mainly driven by working capital. And for full year, cash flow from operations amounted to SEK 30,000,000. In the year, we continued to invest in our platform, and total investments amounted to NOK 23,000,000 compared to NOK 29,000,000 in 2019. And this results in a total fixed asset of SEK 62,000,000, which of all almost all is related to intangibles and our technology. We had an ending cash balance of SEK 170,000,000, which we believe gives us the resources to continue to invest in profitable growth. We are in a solid financial position. We are very asset light, which reduces the risk and capital needed for our day to day business. So with that, I hand over back to you, Christophe. Thanks. So I mean, we're now at the final slide, Slide 14. And Where are we now? Well, 1st of all, CDN is the leading Nordic marketplaces in the Nordics. We lead. Really proud to do that. We're also leading in a very favorable market. It's been super favorable during 2020, but we think it's going to be favorable going forward as well. Because the low penetration of marketplaces and that this trend is picking up, because the Internet penetration, the online sales penetration is still increasing. So we're really positive about that. We see strong demand from our merchants. We see strong demand from our customers for better solution. And we feel that with our technological platform in place, we can go and execute on that and deliver a stellar customer and merchant experience. As mentioned, we will focus on the customer experience. And with customers, I mean both consumers and merchants. We're going to continue to grow our assortment in order to become more relevant for the consumers, but also because it drives growth. And we will do this with a lot of new merchants, but also with a lot of new partnerships. And we will go and strengthen our operations and also add new services relevant for our merchants. When it comes to operations, we still have room to improve on marketing efficiency. We have room to improve on the way we work with data, and we have room to improve in the way of operating our company. When it comes to new services, I'm super interested about integrations. I'm super interested regarding insights that we can help our merchants with. And I'm very positive towards the opportunities around advertising. We had to suspend advertising for a short While during the platform change, which has impacted us slightly, but we see great opportunity in getting back on that track with much more advanced solutions and driving further opportunity in this area. With that said, That's all from us. I hope you enjoyed listening to us, and I hope you enjoyed understanding a little bit more about CDN. Now we would like to open up for questions from the audience. Thank Our first question is from Alan Whiting. Please go ahead. Your line is open. Hi. This is Adam Wyden. I don't know if I got my name right, but Terrific quarter guys, really, really impressive and really liked for me being an American investor getting kind of the story And how you're looking at the business. I think you guys are looking at it exactly the right way. And we've had terrific experience of investing in tech turnarounds, and It looks like you guys are well into it. So just kind of qualitatively, as Americans, We don't we're not consumers of CDON and obviously all we have to rely on is kind of stuff we read on Twitter and Stuff that we talk about with people. I mean, there is this perception that CDON is this old company that sells CDs. It was Public, it was not very successful at Mergent. This holding company spun it out. How do you feel how do you think about Changing the perception locally such that millennials and younger people start consuming it and They know that more is a 3P marketplace as opposed to like a book reseller. I mean Domino's did an interesting thing several years ago and they basically came out and said, look, our pizza was crap. But we've invested enormously in technology similar to CDN. They developed their In house tech platform, which was best in class, they improved the quality of the food and now Domino's is like the fastest growing franchise. I mean, how do you think about kind of Coming out and saying, hey, this is what we were, this is what we are now and kind of doing a new brand like from a marketing perception point because there's a flywheel, Like when people understand what it is, it grows sales, they have a good customer experience, they keep going and the thing goes. I mean, how do you think about changing that perception locally about what new CDR is? Well, first of all, I think that Your example regarding Domino's is a very good example because they approached it the way that I'd like to approach it, which means that basically, First of all, I need to lay the foundation. I need to have the foundation in place in order to be delivering a great customer experience. That is exactly what we have done. That is exactly why we have invested in a new platform that is built around being in marketplace rather than trying to kind of put lipstick on an old platform that was built for retail. But that is the first step. The second step is actually to kind of do all the Good stuff that you can do when you have the foundation in place. That is improving the customer journey, improving the features needed from customers of today, listening to your customers, analyzing your customers and understanding what exactly are they missing and what exactly are they loving with the current experience of CDON And then build on that and go and have something that is above market. On top of that, you need to, in parallel, educate the market and the consumers regarding what are the benefits of what we're doing right now. But I don't want to just do education. I want to make sure that If we tell a customer, come to CDON, it's a great experience, it has to be a great experience. I hope that answers your question. But that is really the right piece. Yes. That's wonderful. I mean, look, there's a wonderful book that we like and for you to read and maybe others to read, which is basically about Vernon Hill and Vernon Hill's journey at Commerce Bank. And he sold it to TD Banking. Commerce Bank is a banking is a commodity business, right? Everyone has money. I mean, anyone can buy products. But basically, our increase was if we're open 20 fourseven and we have dog treats and we have the cash machines and all this stuff, Effectively, you're creating fans, not customers, right? You're creating people that love your products, right? And if people love the product, if they love the experience, you can make something commoditized, have a very, very large vote. And I think you have a very large vote to begin with. So I totally get what you're talking about. I think You guys are doing wonderful things. I'm very happy to be a 7% shareholder in the company. We followed many marketplace businesses, MercadoLibre, See and once you kind of get that tailwind and people I mean the flywheel is crazy and so For you guys to be able to do this so early is and profitably, it's super interesting. So let me keep going for a minute. So if I just kind of think about where this company can be in the intermediate term, right now you have $2,400,000,000 of GMV. If your sales growth is effectively constant in 2021, you're looking at something that's going to do close to $4,000,000,000 of GMV. Today, you trade in a fraction of that. You trade at like 0.64x GMV, just Back of the envelope math. And most marketplace businesses that are not even profitable and they have sales growth a fraction of what you have Trade at 3 or 4x, 5x GMV. I mean, in our mind, right, you guys can grow much faster if you guys were to You'll burn capital, but you don't have that cost of capital. What do you think the process is to kind of getting Your valuation in line with the peer group such that you have a cost of capital that allows you to invest for growth. I mean, if you guys I mean, You guys could do all types of converts. I mean software companies in the United States do all types of converts. I mean if you were able to make your cost of capital in line with your peer group, we're looking At a stock that's several multiples higher than what it's trading at now. I mean, how do you think about that valuation convergence and your valuation relative to your peers? It's very hard for me to comment on valuation. I'm super focused on where we are, And we're super interested in listening to your inputs. Regarding how to invest in going forward, I can't tell you which levels we're going to be at. I can tell you that we have invested in our technology in the last couple of years. We have invested in building the right organization to become a marketplace and many other things. And we will continue to invest because we will not give up. We want to truly revolutionize Nordic e Commerce with something that is up and beyond where we are. Where will this lead in terms of market growth, etcetera? That's very hard to say, but we should be better market, I can tell you that. So if the market is growing X, we need to grow X plus for sure. Capitalization and all that, Let's see how this plays out. That's specific. Okay. Dan, that's wonderful. Can we talk a little bit about take rate? I mean, I know you guys slowed down Advertising. But if we look at 3P Marketplaces, I think one of the things you mentioned in your comments is that you're able to observe successful 3P. And you have many Etsy, Natalie, Z. I mean, all of these companies have take rates probably approximating 15%. I Obviously, you want to deliver value to your merchants and customers. But I mean, how do you think about share of wallet expanding in the near term as it relates to take rate and obviously Well, today first of all, today, our take rate is mainly comprised of the actual marketplace commission. So advertising and anything else would be added on top of that. There's room there's lots of room on table. There's scope for sure of improvement. Yes. Perfect, perfect. Okay, last question and then I'll get back into the queue. So obviously, as an investor, when you're kind of thinking about a steady state, you're looking at TAM, Right. And what the TAM is and what your penetration is. I mean, in your mind, is there any reason why CDN can't get over $10,000,000,000 of GMV. And we've spoken to many former employees and people in Sweden, and they basically laugh at us when we say €10,000,000,000 of GMV, they're like, we can be much, much bigger than that. I mean, how do you think about the total addressable market in kind of Swedish Kroner GMV terms? And how do you think about kind of getting there? And I mean, obviously, from a marketplace perspective, you don't have the supply chain and logistics necessarily underneath it. Now in Sweden, you probably can do that stuff to get close to the customer. But how do you think about kind of broader European penetration beyond just the Nordics Once you kind of have your sea legs under you. Let me first start off saying, but I love your ambition, Because I hear that you're so ambitious, and I am ambitious as well, but I'm also very occupied of taking it in the right steps, building something that is solid and that is sustainable. So I'm a core vendor originally. And someone comes to me and say, I'm going to build the nicest house ever. You need to know how to build. Otherwise, it's just a dream. We are good at building, and we have started building now. But keep in mind that despite the fact that we're over 20 years at the company, we're only a few years at the marketplace. So this is really early days, and we have so much left to be done. Right now, the focus will be on improving the customer experience To take care of our customers a little bit more, we're going to continue to expand our assortment to be more relevant, and we have a lot of operational and commercial avenues left explore. Will that take us to 10% to something else? We will see. But let us work on this and we'll see where we get. I mean, I guess from our perspective, the Nordic total e commerce spend is $1,000,000,000,000 Right. I mean, if you think about Amazon, Amazon got into grocery. I mean, dollars 1,000,000,000,000 in Nordics, not including beyond Europe, I mean, it's you got a lot of money to work with. So I mean, look, I love your ambitiousness. I see you're on LinkedIn, many of the guys are young. You've got great shareholders in Wright Ventures. Look, I'm all about innovation and energy And constantly evolving the customer experience. And so look, this is music to my ears and I look forward to building our position from here. Thank you very much. Thank you very much for the confidence in us. Our next question is from Brad Hathaway of Farview Capital Management. Please go ahead. Hi, Christopher and Nicholas. Thank you for a very helpful presentation. Just had a couple of questions I was curious about. First off, You kind of mentioned you talked a little bit about this, but I'd love to hear more about some of the, I guess, the headwinds that the technology transition created in the business In the Q4 as well as also, I guess, some of the headwinds you saw from lack of supply in the Q4? Well, first of all, I mean, I don't know if you've changed the platform, but the platform change It's always hard to anticipate exactly what's going to happen. But during the We launched a new platform in the end of October. And the new platform is fully automated. It's automated on personalization recommendations and many things like that. So just getting everything trimmed in, in the beginning has been a lot of work for us. So We are making real progress here, but sometimes it's very hard to anticipate exactly what's going to happen, and that's the situation we've been in. Not to say that it's negative because I don't think so, but I think it's been a good period for us because we could pour so much data into it, as I mentioned. The more data we feed it with, the better it works. If we're looking at supply of products, It's been a pressurized market for many. Not everything has been available due to the pandemic. So some of the supply in Asia hasn't been available, And maybe those allocations of supply had been given to more major markets than the Nordics. Some players were able to absorbed more early on where some players weren't. But this has affected many, including us. Okay, great. And you spoke a lot, I guess, about your Kind of the opportunities you see ahead of you. I mean, I just love to hear about some, I guess, the lowest hanging fruit you see in terms of improving the platform so You can kind of delight the consumer and also be a really strong partner for the merchants. Yeah. We're working on a lot of things here. But I mean, one of the things that we need to get better is the data structure. We need to improve on the data structure the way we absorb data from our merchants, structure that data and use that data to create relevance in the platform. So that's an area that we're going to go and work with. Another area that we need to work with, which still remains, is the whole checkout flow. We had a checkout flow that is very much the same checkout flow that we had in the old platform. And now we need to go and work on that checkout flow to optimize it because we can see that it would be a great benefit for us and for the customer experience. That is things like delivery options. Today, we offer very few delivery options, There are actually more delivery options available behind the curtain, but those are not reflected on the platform. So being able to offer, Last mile deliveries and things like that are super important for our customers. And we do deliver good last mile today, but it's not visible on the platform. So things like that are super important for us to kind of get done during this year. Got it. Great. I love the focus on kind of all the things you improved. That's very helpful. In terms of penetration, I guess you have 1500 merchants currently. And if memory serves, there's something like 60,000 in Sweden alone. So obviously, your penetration among merchants is incredibly low and that partially explains why Marketplaces have such a small share of the total e commerce GMV. So I guess, can you talk a little bit about what you're seeing from the merchant community in terms of their awareness of marketplaces and Their interest and potential willingness to move over to a marketplace solution? Well, first of all, the overall awareness and interest has increased. I think it's partially driven by the fact that Amazon entered and all of a sudden everyone had to start thinking about marketplaces. That was very hard for us to drive on our own. We've got a good help from Amazon on that. But secondly, also, we see that our work on PR branding and kind of repositioning of CDON has led to some interest in the market. So we've seen greater inflow from Nordic retailers, and we've also seen greater inflow in interest from merchants and retailers outside of the Nordics. And we still have a lot to do here. We still have a lot do here. There's a lot of aggregation happening in the market through different kinds of partners, other marketplaces, etcetera. So we're early Stages, I would say. Got it. And then final question and then I'll feed. In terms of so obviously, as you mentioned, Amazon, I mean, everyone's Worried about Amazon. But in terms of the rest of the competitive environment, I mean, do you see other players doing a competing 3 gs marketplace in the Nordics? I think that the overall interest and awareness for marketplaces at the business model will increase, And I think that more and more players would look into this to see if they can get something going. We've seen this during the last couple of years, and it will probably continue. With that said, I don't necessarily see these other marketplaces or players using your marketplace business model as competitors. I see them as potential collaborators with us as well, because ultimately, in the end, if we can collaborate to serve the customers better or more efficiently, That's something we're interested in. So yes. Got it. Understood. Well, Thank you for all the thoughts and really excited to see what you build in the years ahead. So thank you. Thanks, Brad. Have a great day. Our next question is from David Reed of Lizard Investors. Please go ahead. Hey guys, thanks for taking my questions. Can you just talk a little bit about the 3P GMV slowdown in the last quarter in the 4th quarter Versus triple digits in the previous 3. I'm just kind of curious how much is it driven by sort of the slow Christmas or So the new launch of your platform and launch of reentering of the Amazon. Can you just talk a little bit about that? Did it surprise you of seeing 60% year on year or are there some external factors that kind of impacted? We got some numbers on the market growth yesterday, and it seems like the market overall is growing something around 30% this year, so doing 60% now. I think that's a fantastic result. We're beating the market by 2x or something. For me, Obviously, as we mentioned before with Brad, the technical platform has surely impacted some. The lack of supply in certain areas of some goods has maybe impacted some. I can't relate much of this to anything regarding Amazon. I don't have any indications on that. So that one, I can't comment on. But overall, we're really happy about Q4. We're really happy about 60%. And keep in mind that the growth numbers, There are much larger volumes. We had tremendous growth in the year before in Q4 in the marketplace. And now we're leaving larger volumes when we talk about growth Fair. So for me, this is a fantastic result. Okay. Maybe just going back on the launch of the new platform. Did you guys see the impact? Because obviously, you've said this in the past, right? You're able Track every transaction down to the very, very every step of the way, right? Just would you say if you didn't Re launching the new platform, would have been would you I think did it impact 20 points, 15 points, I'm just kind of curious like how big because it seemed rather dramatic, right, especially even versus some of the other peers you've seen In the online space in general, like just the delta on a sequential basis seems significant. It's very hard for me to comment on specifics. I mean, Our ambition is to outgrow the market, and we've done that throughout the entire year. We did that even in Q4 on higher volume. So I think for me, it's about continuing developing our offer, continuing to develop the consumer experience on the platform and the merchant experience on the platform. And we took it best and launched a new platform that is required in order for us to grow going forward. If that impacted us X or Y, for me, it doesn't matter. I think it's the right choice and we need to go for it. Yes. Understood. Maybe talk a little bit about since you've launched the platform, so maybe how does that look for the month of, let's say, January or February or even maybe December, how are they comparing on a year on year basis on a 3P side Versus the previous quarters prior to relaunching the platform, have they normalized already? Have you seen that coming back? So you can at least get a sense that, oh, okay, it didn't really impact you now that the growth is coming back? Well, I can say that I don't we're going to continue to outgrow the market. We're going to continue to outgrow the market in 2021 as well. Do I expect the same level of growth as we've seen in 2020, over 100%? No, I don't think so because we're growing on larger volumes. Okay. And just on gross margin for the on 3P GMV side, Terrific. Obviously, improvement on the gross margin side. Can you just talk a little bit about specifics in terms of, obviously, it's very high, Small thing, it's all gross margin. What are the tweaks and takes and puts? Like what drove the one point improvement again this What about some of the initiatives you talked about previously like advertising, etcetera? How is this what are the specific drivers behind it? Sorry, sorry. Thank you for the question. Or just can you rephrase the question Regarding gross margin. Yes. The gross margin on the 3P GMV improved by, I think, over 1 point year on year. So can you just talk a little bit about the drivers for this quarter? Yes. I mean, for this quarter, I mean, as I mentioned, we had a higher Commission from our sellers compared to previous quarters. We did also in Q4 started with the monthly fees from our merchants. So I would say that is the main driver for that. Okay. Have you maybe talk a little bit about sort of unbundling of the maybe I don't want to call it the word unbundling of the take rate, but If you look at how Amazon have done it or how some of the other players have done it, right? You start out with a very generic and then they unbundled over the years. Just an opportunity to unbundle here. I mean, closely, you can probably take pricing up, right, on a base level Did you introduce more other services like just the opportunity on the overall blended take rate on the 3P side? What's the opportunity here? And can you give us some sort of sense on what will be for Seller if they're doing advertising versus not doing advertising. Just give us a sense like what's the opportunity as you kind of introducing more products for the sellers Offering more better services, like how that will increase the takeaway coming to you? Well, first of all, I think that we are on the start of a journey here. As mentioned before, we The take rate is mainly marketplace commission right now, and that is kind of a success fee issue, if you like. Having said that, we need to add more services, we need to add more things that we can offer the merchants that they're willing to pay for. But being specific on that development is too soon, because we're still investigating some of it and some of it we have further. But we see great opportunity in this because there are services like advertising that is required. There are services like further integrational support that we can offer. I think that the merchants are Willing to understand more about what's going on in the platform and in market in general, I think we have an opportunity to go and work with that. Then exactly how that's going to pan out, that's very it's very early days. It's very hard to say. And we're focusing on this. Investigating this and we're looking at ways of improving this. Okay. And maybe you're right in the way we you're right in mentioning the way we disclosed it today, Tamdah. You probably saw in the report what is included. But I mean, if we see that there's value in, I'm sorry, to split it up be more specific, we will most surely do so, but that is the decision we will take as we go. Sure. Just touching on just the cash flow for the year and maybe even for the quarter. Obviously, working capital continues to be terrific. But just maybe comment a little bit about Obviously, the working capital improvement wasn't as significant as previously. Can you just talk about what happened on the payable side? It was obviously, it was a significant outflow for the full year. How much of it was impacted by maybe the spin off something like that? Can you just talk a little bit about that? Absolutely. I mean, the spin off itself did not really affect here. And on the payable Slide. We have I mean, the retail business, those payables are decreasing. But as we are increasing the marketplace GMV, The debt to our merchants is increasing. So that is the driver there on the debt side. But the because I'm just looking at it I'm looking at the cash flow statement, the operating liabilities It was down significantly, right? Was this driven by maybe you guys pushed that pretty hard the year before, Creating difficult comps or were the specific, just because the delta seems quite significant, I'm just kind of curious what that is. Yes. I mean, the reason I mean, last year, we have a much larger retail business. So going out of the year from peak seats and the payables related to the retail business was of course a lot higher and that is the main reason. Okay, okay. And that's terrific. And maybe just talk about going forward in terms of the CapEx, obviously, further Building on the platform, are you guys doing anything on the fulfillment side? Or is this going to be sort of continuously sort of SLI? What are you guys doing in terms of supply chain, warehouse logistics and etcetera to sort of stimulate More sellers coming to the platform or making it easier for them. I'm just kind of curious, like, is CapEx Obviously, down again this year. Just kind of thoughts on that in terms of what are you guys spending? And what more could you spend to really drive or even accelerate drive growth for 3P Business? Well, first of all, as I said, for us, it's important to build solutions and capacities that are needed by our customers. And if we take the merchant's time, we have engaged in new collaborations during this year and the year before. One of those collaborations was a collaboration with a French marketplace called CDISCAN where we operate together. They have a very strong assortment, very strong pricing, super relevant for the Nordic consumers. The problem is that they're in France. That's pretty far away, which means that they don't have the ability with next day delivery, which would be kind of the standard in the Nordics, right? So that kind of spawned the need for some kind of fulfillment offering towards them. And we have other merchants that are requesting similar solutions but with different needs. So this is something we are investigating right now to see how How can we put together some kind of fulfillment offer to improve the customer experience on the delivery side with these partners that doesn't have the capabilities themselves? So this is definitely an area that we're looking into. Are we going to go and build our own supply chain? No, I don't think so. I don't think you're going to see CD owned lawyers going on the street anytime soon. So we're looking at partnerships where we can kind of partner up with some of the leading actors in the market and create the value proposition together that we can offer to the consumers and to the merchant. Okay. Just maybe just one last question off on my end. On the Amazon situation, the launch, Because I was reading somewhere like Amazon's launch, actually might could have had an impact. Maybe just talk about why Aren't you seeing any impact from Amazon or maybe even from your sellers because it's not like you don't have mean, millions of sellers, right, just small market. It's only 1,000 of number of sellers. Just kind of curious like Why aren't you seeing any impact at all? Or is there any product category where you might have seen any impact? Is there any Key or anything that you can talk about regarding the impact of Amazon other than you don't feel like there is any? I mean, Amundsen are they're a fantastic company. When they go for something, they really go for something, and I admire them tremendously. They had a scale out model. So they're pretty much scaling what they have. That's the way they operate or at least have been trading up until now. That means that they have they launched in Sweden, but mainly with kind of German assortment and German product. I can't say whether going to be compelling or not to the consumers in the Nordic. And I'm sure they will build their value proposition over time. But I mean, If you take it, we have a strong local assortment at hand. That helps us a lot. We also have a very Kind of trusted brand, we're in times of turmoil right now. And when it's turmoiling, you go to the people that you trust. And yes, CDON isn't the perfect brand. We don't have the customers doesn't understand exactly what we're doing right now, and we have so many flaws in the way we operate. But still, they know CDN since 20 years back and that's worth something. We are focusing on our platform development now to improve the customer experience. And we do that when we listen to our customers. We have these 20 years of experience on what the Nordic customers want. So I think that those are kind of the strongholds that we use in order to mitigate any competition from Amazon. If you then go to the kind of merchant side of things, it was very hard to anticipate how they would attack this. What I'm hearing is that their penetration isn't that high yet. And for us, we don't really care about that because we want to make sure that we're easier than Amazon to work with. We know for a fact that we're cheaper. And one of the things that the merchants really value with CDO in the Nordics is that we don't compete with them in their categories. We don't sell our own 1 piece stuff anymore. That's why you see it so rapidly declining the retail side of CDO because we want to truly be there for the merchants, right? And with that broad assortment, it's going to be something that the Nordic customers are going to value. What are the things that you guys are if we speak to, let's say, like couple of 100 of your merchants, what are the things that you guys have done to make it So that's distinctively cheaper or easier, I mean, I know it's cheaper takeaway, but how much is easier for you guys to work with The sellers, like how visibly easy or convenient are you guys from the sellers' perspective? I'm not sure if I understand that question. I'm just saying what are the options that you're offering to the sellers where It makes it much easier to work with CDN than, say, Amazon. Okay. Well, if you take the easiness, if you look at the way we integrate, the way you integrate, so if you try to kind of put your product on Amazon and you try to put your product on CDN, You will find that the integration flow is easier. For instance, we launched a technology which we call IMSA. It's a scraper. But basically, the only thing we need from the merchant is that they send us their URL and say, www.myhomepage.sc. Then we will put into the call their page, we will call in their content, we will call in all their products and their stock information and all their pricing and everything, we will put that into our interface. But the only thing they need to do is to go in, validate whether it looks okay and then push publish. That means that a merchant can join CDON on Thursday and start selling on Friday. So we try to be efficient. That's really what we're trying to do. And looking at our APIs, they're super simple. We've talked to some of the other marketplaces in Europe, and they said, wow, You guys have the easiest integration we've seen. That's amazing. So we've put a lot of pride behind making it easy. And when it comes pricing, we didn't start off with kind of a global model or building it off Germany or something. We looked at what are the market dynamics in the Nordics and what is the appropriate take rate per category in order for us to be relevant, in order for the merchants to survive profitability wise, And then we've built our entire model around that. Got it. Okay. All right, great. Terrific. This is all the questions I have. Thanks. Our next question is from Nick Tham of SEB Equities. Please go ahead. Good morning, everybody. So I'll try to be quick, but I'll fire away a few questions, please. Let's start with one thing in Q4 results as such. You're right specifically on the developments of And sort of commission income being up 7% to 6%, while CDON Connect Service and advertising income is down about a third. Would you care to share how much of Revenue is actually generated in these two categories in the quarter. And do you expect or should we expect And should we expect that you will disclose that going forward? So Mikkel, are you asking for a category breakdown? Is that the question? Yeah. How much of sales are CDON Connect? And how much of sales is 3P take rates? I as Christophe said this before, we don't split up that. But as we did say, We did see a decrease in the advertising income that we do. And just to give some flavor around that, Because we talk also about opportunity going forward. The advertising we have today is the traditional banner advertising on sale on the site, which is not part of the what you refer to as the connect part. So that's the decrease in the quarter. But we don't As for the entire market, that is free fall for everyone. Yes. Well, we don't disclose the actual sales. Okay. Can I ask you, Are there any thoughts on sort of a target retail G and D development for 2021 at this stage? Or for that matter, when do you expect it to be 0? We will continue to entertain the retail part of our business. I mean, this is a question we get a lot. Are you going to close it down? Why are you keeping it? For us, it's important because it's value to the customers and it's still value to CDN. It's not burning us. It's not hurting us. And we have many customers. I've been customers with CDN for 20 years. If we could find someone that keep in mind that retail for us right now is just media. It's some games, it's music and it's movies, right? If we find a merchant that can cater and serve the customers that we have in a similar way to us or even better, then it will go into marketplace immediately. The problem has been that when we tried to transition this, we found that it was very hard to find another retailer that strong in this area. That's why we had to keep it ourselves, not to let our customers down. So will it be 0 at some point, well, that depends on whether there's interest for the from the customers. Yes, it's been declining. But in some quarters and some months, it's even been growing because there are enthusiasts out there who wants this. So we'll see where it goes. I can't give you a specific date. I wish I could, But that is impossible. But I can assure you that we will only operate it as long as it doesn't burden us, which it doesn't today. Okay. Let's move on. In terms of 3P GMV developments in this year, let's say you grow Your business by 50% or 100% or whatever percentage rate it actually turns out to be. Could you just elaborate a little bit On what will actually drive that growth in terms of the split between growth in active Customers, growth in AOBs, growth in number of orders. How to what extent will these 3 different drivers impact the results In 3P GMV growth in 2021, please. Well, as you probably can pick out From the presentation, I hope that is clear, is that we want to take care of our customers a lot better than we have done. So that's definitely a growth lever for me. I want to make sure that all those customers who didn't really understand our transformation now understands our transformation and falls in love with the kind of customer offering that we're putting together for them right now. So that is definitely one of them. The second thing that will drive growth is obviously the ability we have to aggregate relevant assortment to have the kind of the retail basics in place. We want to make sure that we have not only the widest assortment, but the most relevant assortment, maybe also the most price worthy assortments and many things like that. There's plenty of opportunity left to trim that going forward. As I said, 20 years in the making, but only a few years as a marketplace. So we have so much headroom or sorry, room to grow here. And then, of course, working with AOV, sure. Working with conversion, sure, all of it. I agree with you. But I would say the biggest single opportunity now is to improve the customer experience in order to serve our customers more efficiently, If you ask me, this is one ahead of the others. Yes. So just so I get this right, average spend is probably going to be the main driver of the PG and E growth in this year rather than new customers. Now we saw strong customer growth during this year, but I think some of it was probably driven by the pandemic. And I'd like to cater our customers better, if you ask me. I want to make sure that When they come to CDN, they are met with something that they find really attractive, which makes them loyal and want them to come back and buy more of this. Final question in the interest of time. You don't have any financial targets. What's the sort of discussion Between you and the management teams or for that matter on the Board of Director level? And When could we expect that you would be announcing any objectives, any financial objectives for CDN? That is a good question. We would see how we play that. We haven't made a decision on that yet. But what I can tell you is that We want to beat the market growth. And we're pretty hard on ourselves because that market growth, if you talk about the e commerce markets in the Nordic, that's also including food online, pharmacies online. So I mean, we're looking at growing faster than the market, I can tell you that. And kind of a final question. Whatever growth you achieve, and I'm sure it's going to be quite Decent. Would that be sort of trying to maintain a quote decent profitability? Or is it going to be at the Well, this is always the $1,000,000 question. And for me, it's about For me, profitability can be regulated by 2 things. Either you have leakage or you make investments. I'm always for investments, but I hate leakage. So when we haven't optimized something and we're making profitability duty, that annoys me. But if we're taking money, Putting it against something that we're really betting on in order to gain something, I'm happy with that. So I think that's where I am. Perfect. Thank you so much, guys, for taking all these questions. Thank you, Nico. Thank you, Nico. Have a great day. Our next question is from Matt Sayer of Merrick Capital Management. Please go ahead. Hi, guys. Thank you for taking my question. And impressive on the ongoing 2x This is Bass Ecommerce Growth during the platform transition. I have two questions. The first is, can you talk about the Cdiscount Integration, which appears to be using a leading Nordic marketplace brand, Sibon, to connect customers to the rest of Europe and vice versa. How has that partnership progressed thus far? And has it opened up conversations for further integration opportunities? That's a very, very good question. Thank you very much for that, Matt. We are super proud about the collaboration because we gained so much from this. First of all, we gain knowledge. That is the most important thing. We are so impressed with CDISCount, the way they operate and the matureness of their business compared to ours, and we have a lot of learnings to be made there. Secondly, I think that the discounts You got to I know you will. So call them and ask them if they're happy. But I mean, they didn't have that high anticipation when we started this collaboration. But I can see in the discussions we're having with them, they're really happy now. They're really happy to see that we can help them and we can and that they can help us. We have seen an uptick in this business over the year, and we have great hopes for this going forward. What they do is that they sell their very strong assortment with us. And as you said, it's a great combination because We take the customer first line, so to speak, so that if the customer buys, they know they're buying CDN, they know that someone is going to be able to respond if something happens because that's one of the fears of buying from foreign players. Oh, can I really handle this with a French player? But now they know that CDN is always there to help whether something goes wrong. So that adds trust with the customers. But with that said, what we get from CDISCount is that access to new assortment and access to new product groups, access to new price points, etcetera. So we see this as the perfect fit. Is this possible to expand to other marketplaces? Sure. For me, it's an opportunity. I'd like to work with many marketplaces. For me, the trick is to offer something that is of value to the Nordic consumers. That is our job. And if that means collaborating with non Nordic players to support them, we will go in and look at that. Marketplace is 1 avenue. The 2nd avenue could be aggregators. There are aggregators of merchants out there in Europe that we haven't yet worked with that we're interested in working with. So this is an exciting area for us moving forward. Great, Great. That's really helpful. Okay. My second question is, it's interesting that your advertising revenues are almost it seems like almost nil today As a percentage of your total revenues, but are quite meaningful in some of your marketplace peers around the world. And it sounds like there are some Platform transition reasons why advertising declined this past quarter, but could you give us an example of the size in terms of revenues Of that advertising opportunity that is still completely in front of you guys? Yes. That is the $1,000,000 question. I agree with you. We have been looking at other marketplaces. And we do see that The absolute leader in this is obviously Amazon in the U. S. Their last quarterly results show that the advertising for them is becoming super significant, right? We also see that other strong players like Allegra in Poland have a very strong business going, and then you have scale of different marketplaces who have explored this avenue and reached certain stages of success. Where are we going to place ourselves in this? It's again very early. What we need to do now is to put the foundation in place in order to go and execute on this, and then we will monitor and drive it closely to ensure that we get as high as possible. But I can't tell you right now how high that's going to be, because it's a How should I say, it's an ecosystem on many components that need to work in our favor. But what we're looking at now Basically advertising programmatic advertising where we allow our merchants to bid on search words for products similar to other marketplaces. That is a solution that we haven't had in place before, and that is super exciting. Great, great. And thank you for doing the call and English was really helpful. All right, that's it for me. Thank you, everyone. Our next question is from Asaf Mazan from Eden Alpha. Please go ahead. Hello, guys. I'm calling from Israel here. Thank you for a very good quarter. Actually, most of my questions were already answered, but I have one that is still unanswered. It may be a little bit sensitive, but I I wish to ask it anyway. From conversations I had with local guys in Sweden, I understood that you have only you have Cliro as a payment Sian, much like I think eBay once had only PayPal. So I was wondering why do you only offer Claro and Would you consider also offering Klarna, for instance? I think it will be a good a great positive for you if you will also for Klarna. Well, keep in mind that we used to be sister and brother, CDON. We've been sitting together in the same group for many, many years. So we have a contractual obligation to stick with with Clivo. But having said that, we love Clivo. We think that Clivo is a very strong payment partner for us. We have a rev share model with them, where we get kickback based on the volume that we create for them. So we're super excited about being together with Cliro. Will we be with Clio forever? Who knows? Will I be the CEO for CDN forever? Who knows? No one can predict the future, but what I'm saying is that right now, we're super happy about Cliro. We're working together with them, and we get a level of Stability and they're listening to our needs and they're working together with us in building the best solutions available. So I don't have any complaints about Clear, to be honest. Could we get more out of Plurana? I don't know. Will it be possible to offer them in parallel? No. We have another question from David Reid of Lizard Investors. Please go ahead. Hey, guys. Just last one for me. I think I remember we talked about in the past your cash operating expenses being coming down, obviously demonstrating Incredible scalability in the business. And your OpEx is coming up a little bit last couple of quarters. Can you just talk a little bit about how you guys sort of manage that, obviously, while investing significantly ahead, widening your positioning, How your thoughts are, is this still going to be around the $200,000,000 I think this 2020 was about a little over $200,000,000 How do you guys think about that in terms of do you guys feel like you've increased that dramatically over time? And just how much of that is really kind of growth related? And And how much more room and flexibility for you to kind of driving more operating leverage as you continue to drive the 3P business? Yes. I mean, first of all, if you look at the 2020 numbers and we take out The marketing spend, you can see that the underlying OpEx, that is the personnel and the resources needed to just run the day to day business, was quite flat, excluding the listing and the incentive program for the year. And then we have, of course, the marketing spend that is variable in terms of it's a tool for us to accelerate growth. So that is a variable cost, which will grow. And if you look at the OpEx part or the personnel part, we have throughout the year invested in new personnel, And we will do that as well going forward. It will be, I would say, a lot of specialists instead of more generalist people. So there will be an increase in that kind of resources going forward as well. But it's fewer Rather than many, if you understand what I mean. Pure specialists and more generalists, yes. Okay. Great. Thanks. Our last question is from Alan Whiting. Please go ahead. Hey, guys. Sorry to jump back in. But I wanted to kind of build on Brad's question. He pointed out that there are 60,000 merchants And we're only 15 we're only penetrated in 1500. I mean, given your marketplace business, I mean, we look at Amazon Web Stores and we look at some of these things at CD and stuff. I mean, it doesn't seem to be a huge amount of frictional cost As a merchant to be on multiple platforms, I mean, can you talk to me about kind of how you view the 60,000? I mean, Yes, there is duplication as long as they're not even if they're selling on their own website, I mean, is there any reason why that All of these guys can't be on CDN as it relates to merchants. Everyone is trying to maximize their revenue and their wallet share. I mean, don't you think That all 60,000 merchants are technically up for grabs. I mean, how do you think about that? And what's the incremental cost to you to onboard a merchant? And What are the frictional costs for them? I mean, it doesn't seem like they're very high. Well, Yeah. That is a very good question. Keep in mind that like in any market, those 60,000, which by the way is Swedish number, it's not the Nordic number. I think you have another 50,000, 60,000 in Norway, 25,000 in Denmark and I don't know the number for Sweden, but I think there's yes, sorry for Finland. But there's plenty of them. But I mean these are There are different groups. Some of them are services related, and we're not services yet. We're products mainly. So you will have some kind of You have you will have some boundaries where we can't be I mean, we're not super strong in fashion, for instance. So if you're in fashion, there right now, CDN is not the best place to go. We're good in other categories. We've created beauty, for instance, have plenty of merchants in the beauty segment. If we take that sector of the market, which should be applicable to many. In some sectors, we're not applicable to many. Then the second factor you need to consider is Where are they maturity wise? No. Some of them, they may be at a size or a position where they don't even have the ability technically integrate to marketplace or anything, they may be low on digital competency. So in order for us to gain them as merchants on our platform, we need to help them by offering them maybe integration services or something else that enables them to go on that, right? So that is also kind of a parameter that needs to be taken into consideration. And then obviously, you have the kind of should I go on CDN? Should I go on Amazon? Should I go anywhere? And that is a commercial discussion that they need to have. I think marketplaces is a phenomenon That has created tremendous value in most markets and we will do in the Nordic market as well as soon as people get the hang of it. But then they also need to understand the dynamics behind it It's not as easy as just uploading a few products and then you will revolutionize your business. You need to work with the marketplace the same way you work Google, the same way you work with any other channel to the customer. You need to kind of serve the customers with the right amount of content, the right prices in order to be competitive. You need to under your delivery times and things like that. So depending on the capability of the merchant, some will go faster than others. But over time, I think that marketplaces will be a very valuable contribution to many retailers' business. And our job is to Listen to these retailers, understand their needs and provide them with solutions that enables more and more of those 60,000 to kind of join on. Got it. And quickly, I mean, it's again, I don't know how payments payment networks work in Sweden. I certainly know how they work in the United States. I assume they're similar. But it sounds like you have a referral agreement with Claro and they're your merchant acquirer. Assuming the unit economics are somewhat similar, if you look at Etsy and all these other companies, I mean, these guys are effectively payment facilitators and right, they take underwriting risk, but They're capturing a much higher wallet share for payments. And so perhaps the previous caller was asking in a more benign way, but I don't do things benign. I mean, if Claro doesn't substantiate better margins from referral, I mean, What is stopping you from becoming a payment facilitator because that seems to be a very large take rate opportunity for basically every other marketplace business? We have seen this cost being explored by larger marketplaces in other markets. If this is an area that we need to explore, it's too soon to say. As I said, I don't want to be we switched the platform in October. I I have many other priorities than going and building just that right now. Will it be something for the future? Maybe. But right now, I have other things to prioritize. Yes. I mean, look, obviously, at this valuation, I mean and the sales growth, I mean, this is kind of my last We talked a little bit about Domino's and kind of the new CDN. I mean, how do you think about investing in sales and marketing? So when I think about growing a technology company, And I think many of the people on this call know that I was invested in Par Technology, which was in many ways much more screwed up than this company. But they went through a heavy R and D investment phase So they could solve their tech debt to serve the customer, which sounds like what you're doing. And now they're investing in sales and marketing Materially to basically now sell the scalable platform. And so that's an enterprise solution. It's a lot less local than what this is. How do you think about whether it's television advertising or search or I mean, how do you feel I mean, call them, it's like a coming out party. I mean, how do you feel you're going to communicate kind of the new CDN to the customer so they know next time to order from you and not go to the store or whatever. I mean, how do you what types of things are you guys thinking about to kind of do that coming out party? You see what I'm saying? Yeah. I mean, again, you're asking questions that are not fully detailed yet. We have plans for But I'll let you know that, as I said before, we need to get the customer offering straight. That is super important. And I don't just want to articulate, oh, CDN is great, come to us. I want to be able to tell why we're great. In order to tell why we're great, I need to have the proof that we are great. So I'm going to go focus on making sure that when When you go to CDON and you search for products, you get what you need. When you want to filter on stuff, you find the filters you need. If you want to check out with CDON, you have a super cool checkout. If you want to choose delivery one way or another, you are able to choose that delivery. When you call our customer service or email our customer service or chat with our customer service, we'll do something else with customer service. We're going to be there for you. We're going to deliver what you expect. That is the customer offering we need to go and build now based on this new technological foundation. And if you look at one of the slides, we've released a lot already since October, and we're going to continue to develop on this going forward. And in parallel with that, we need to kind of iron out where we see value of this and start articulating this to the market. We want to be super clear to the market why they should come CDON not just because we're CDON, but because we add some significant value to their customer journey. We want to make their life easier when and when they go shopping online. And then we can't be just any increase. We need to do more. What's great about businesses like this is because the incremental margins on Marketplace are so high, there is this flywheel effect, right? If your sales go 100, Invest in sales and marketing your sales growth and that gives you more gross margin dollars to continue to improve the customer experience. I can promise you Amazon's customer experience in 2021 Without the customer experience in 2000, right? When everyone said Jeff Bezos was crazy that basically he had his working capital feeding All this loss, what he was doing is building effectively AWS and everything else. And so look, I totally get it. It's a balancing act, right? You need that gross margin dollar to continue to improve the customer experience, right? But you also want to make sure that the product You're selling to people is good enough such that they come back, right? So I totally get it. I totally get it. Good. Okay. Well, look, that's it for me and that's it. Thank you. Thank you very much. Thank you. All right. We do have one further Question, if you have time to take it from Asaf Nathan from Eden Alpha. Please go ahead. Please go ahead. Okay. Yes. Thank you. So thank you so much for delaying the end of the call. But just a quick question. I've noticed that CDON does not have any application for mobile purchases. I personally, mostly 90% of my purchases is online. And I guess most of the other marketplaces around the world, most of the purchases are done via mobile phone. So wondering if you have any plans about issuing an application for mobile phones during this year? We there is a major change there. The previous platform, that was desktop optimized. This one is mobile optimized. We're constantly monitoring the online sorry, the mobile Share of the total traffic in the Nordics and it's very, very high, and we have a very high percentage of customers who buy through mobile. So we made sure that the new platform is more relevant for the customers when shopping mobile. Apps, I've done some analysis on Marketplace across the world. Some have it, some haven't got it. I think it's an interesting one. And we do have a progressive web app that kind of takes the online page and puts it in the app form so you can use it that way. With that said, we're looking into Atlas as one of the possible avenues of creating a larger, how should I say, connection with the customer. But I can't say when and how at this stage. Okay. But it's interesting. I agree with the phone, especially in Asia. Yes. When you have an app, just go to the phone, click on the app and then just go online. When you need to surf, open a browser and then go to CDN. Se, I think there is another good deal, and extra hurdle that you actually move the customer. Yes. But you're hitting a spot here because I don't like waste. I think I said it before, but I don't like waste. So having to go somewhere else in order to go to CDON, that is waste in my opinion. So if we can solve that problem and make sure that we put CDON exactly where the customer is in some shape or form, that is interesting Because I want to make that I want to make the customer experience as smooth as possible. Another thing is that A clarification can send a notification. For instance, a product that you are following a price drop or a new listing from a seller that you are following So if you can actually increase the customer engagement. Now we know. We know. Okay. There are no further questions at this time. Please go ahead, speaking. Sorry, we didn't get that. There are no further questions at this time. So I'll hand over to the speakers for any closing remarks. All right. We have received some questions within e mail, and I think we have covered some of them, but let's see here. We're just going through the questions received by e mail here, I think we covered all of it, yes. We have. Right. Well, unless there are no Further questions, we would like to sincerely thank you all for both the questions and the great input and for listening in to us today on this Very first earnings call for CDN. It was a great thing for us. I hope you enjoyed it as well, and have a great day.