Welcome everybody. It's great to see you here. It's great to be in New York and to do this capital markets day in real life. I think the digital ones we did for a couple years were fun and worked well, but can't beat this. It's also good to be back in New York. I think we had a capital markets day here, but it's like in 2005, 2006, so it was really time. We have some large shareholders here and we hope to have more shareholders here. It's good to be here. It's also good, you know, times are volatile, they're a little uncertain.
As you'll see, I think we're very enthusiastic about our portfolio, but I think it's also, you know, where we're trading at this large discount and everything, so it's good to be here, I think, you know, when times are uncertain and not only when there are like victory laps to run. To come from our desk in Stockholm to be here and talk about the opportunities, but also the issues around the different things in the portfolio. Today, we got an agenda that looks like this. These are five of our largest holdings. A common theme here, as you'll see, is that it's about moving people or moving things.
We've got Ali and his guys who run Babylon, who's not at all about moving things, but keep people where they are when they're sick, so a digital doctor can come to them. I think since most of the companies are around mobility, the panel that we'll have at the end of the day will focus on that. One of our board members, Keith Richman, he will run that panel. I hope you'll stay and join us for that, 'cause that'll be fun. Some logistics for the day is that you saw there's coffee and stuff outside, so we haven't really planned any coffee breaks.
When we switch speakers or, you know, that's a good time to go and get coffee and, you know, come in and out. We'll just keep on going and then try to get as much into these hours that we have together as possible. Yeah. Also for the panel, we're gonna be joined by a company that's not in our portfolio, a company called JOKR, which is in quick commerce. Aspa Lekka is the CEO of that company. They are friends of friends and in an interesting area, so we thought we'd get sort of a perspective also from outside the portfolio. More. One logistic point is that, when we do.
Each of these speakers will have like 15-20 minutes to sort of do a short presentation, and then we'll do a 10-minute sort of Q&A session. When we do that, you gotta speak into the microphone because all the people who are back home in Sweden and elsewhere can hear your question, basically. I think that's all for logistics. In the afternoon, there's some one-on-ones. I think most of you have booked yourself for one-on-ones with the portfolio companies. If you haven't, my colleague Daan is here and will sneak you in to an open slot. That's for intro. A few words about VNV before I hand over to Fredrik. Let's go forward on this.
All of you're here because you know us. This is not gonna be a long-winding sort of introduction. In very brief terms, what we endeavor to do is to invest into businesses with network effects, who operate in very large markets with very strong founders. That's sort of the boxes that have to be ticked for us to do the work, and then eventually sort of to invest. We found ourselves in a few different areas of marketplaces, digital health, but also mobility, and you'll meet some of those companies during the day today. It's about a $850 million NAV as of end of June. That moves around from quarter to quarter, as you know.
Our next quarterly is obviously as of the end of September. It's out in mid-October. I'll come back to that. When we measured our NAV at the end of June, we came up with a 22% IRR over the past 10 years. 22% IRR is. We aim higher. We get paid as management if we go above 20%, so this is just barely making that. We aim higher and in fact, our largest sort of exits have also been at higher IRRs and decent sort of returns on money invested.
Think of Avito and Hemnet, all were exits that we did under our exit strategy of selling when the founders sell. Or sort of return, sort of the return profile that we're essentially looking at. The portfolio is actually 70 names right now. About seven names make up 60% of the portfolio.
Common denominator amongst all these names is that they share this potential of very strong network effects, which gives you very high barriers to entry, and in some cases, winner-takes-everything characteristics, which is something that we learned to love when we were shareholders and investors in Avito, and then sort of have since then disciplined ourselves to only do that, inspired by Avito and all these companies sort of share that aspect. We are in these different sectors. If you sort of divide up our portfolio into the different sectors or macro themes, if you will, you'll see that mobility is a large part of it, and then there's these marketplaces, and also digital health, and then there's some other stuff going on as well.
Hand on the heart, which I typically sort of tell you when I meet, is that we are not sort of, we're not mobility investors, we're not digital health investors, we're not gonna do some sort of hardware which is good for digital health. We are investors in the network effect. We love these teams. We love these macro trends. They're. We think they're very, very strong and they're very interesting, and the way sort of people, as you'll hear from Babylon today, the way people get treated by a doctor is changing profoundly, and that's a very, very interesting space to be in. We're there because we found an opportunity around network effects, not because of this macro trend. Also, sometimes we get sort of, what's the expression?
We're remembered because we spend a lot of time in Russia and Eastern Europe, and we're often connected to emerging markets. In fact, the portfolio that we have today is very much not emerging markets. This is Europe, U.K., Sweden, Israel, et cetera. We do have some investments in emerging markets. Russia and Ukraine now is, of course, we have three or four investments there. They're marked to zero here. We have investments in places like Egypt, the Middle East, Africa as well. They make up a smaller part of the portfolio. I think when we talk to you as investors, we have a lot to talk about.
We never really get around to talking about our next Avito, so our next sort of Babylon, our next Voi, because all of those are already in the portfolio, I'm pretty certain. In the same way that Voi, Babylon, all, you know, the companies we are seeing today, they were completely in the shadow of when we had Avito. Avito's just overshadowed all of them. We never talked about them. In the same way that Voi, for example, and these others now, they take up all the space that for us to talk about, and we don't talk about all the stuff that's in the shadow of those. Here is a lot of stuff going on, that I think will come out of the shadows eventually.
There's 60 names all in all, and we've sort of here divided them up into different sort of capital raising stages. Some early stuff. We've two examples are NoTraffic. NoTraffic is a data play on reorganizing how traffic lights are managed. Israeli company, but with a very clear focus on the U.S. market and revenues, which are growing very quickly here. Hume is an AI play around HR tech and how you recruit people. In the Series A, we've got two companies, Collective Food, which is a marketplace between the restaurants and food suppliers, and one of our favorites, Alva, a Swedish company, which I typically often single out as maybe our next sort of big one.
This is LinkedIn 2.0, to sort of find people and match people with a job on the basis of a CV. It's growing increasingly sort of antiquated and inefficient. Alva has a product that sort of matches people much easier. From that base, which is a SaaS business really, develops into a marketplace where people find jobs and companies find people to work for them. In the slightly sort of more mature Series B, which is also in this sort of large portfolio, we've got OLIO, which is a community which is a business based on a community around the macro theme of food waste. This is a very growing community. Network effect comes around this community.
The early monetizations is that it's around large brands like Tesco, Kentucky Fried Chicken, Pret A Manger, who employs this community to handle food waste. Flo is the world's largest period tracker for women and also becoming a digital clinic for women. HungryPanda in the series C side is the Grubhub of all Chinese communities outside of China, which we own together with among others, but Kinnevik, our Swedish friends. Bokadirekt is maybe best sort of classified as our next Hemnet. It comes from our friends who brought us the opportunity to invest into Hemnet, you know, when was it? 2015, 2016.
It's got similarities. It's a marketplace for booking beauty services. You have the same here in the US. The good thing, similar to Hemnet, is that this company completely dominates this market in Sweden. This is perhaps among the later stage stuff that we have in this portfolio. I just wanted to give you a sense of that, while we spend also all of today talking about Voi and Babylon, et cetera. There's a lot of stuff coming up here, you know, in the part of the portfolio that we don't talk about.
Those are gonna be increasingly important when we meet for our next CMD and certainly our next CMD. These are gonna be the ones that do the presenting. Talked about that going the wrong way. Yeah. Before I hand over to Fredrik, a few sort of points on our portfolio and how we see our portfolio. This picture shows you the NAV over the years, quarter by quarter for the past 10 years. The black line is our share price. As you can see here, our discount has just exploded up to nearly 70%, where we're trading now, compared to our NAV at the end of June.
We'll report a new one in, as of the end of September in a few weeks, but it's not too dissimilar. A few things to say here is that this NAV now is built on. The way we put together our NAV is that we take the last price if there is a transaction that's large and meaningful, so not just any small transaction. If that doesn't exist, we move to a model, and the model we take input from listed markets. Pretty much all our portfolio is either listed or is valued on the back of a model right now.
My point is that, as you can see also our NAV per share falling over this past period is a reflection of that listed markets have fallen, especially in our space. It's not something that's kept high on the back of sort of old stale prices. This is something that's very current and has a lot of input from the listed markets, and those listed markets have fallen, as you know. The other point to make here is that when you buy a stock on the listed market, it's of course just an ordinary share.
When you invest in our world, you typically invest into preferred shares. Preferred shares come with debt characteristics on the downside and full equity characteristics on the upside. Those instruments, as you can sense, of course, they come at a premium to just an ordinary shares, which has full downside and full upside. Some of our friends, you know, in the public space that sort of run NAVs like we do, they actually put a premium. They take the price from the listed markets, and they put a premium on that because they own preferred shares, and those come at a premium. We don't. We do it the other way around.
We take the you know the input from the listed markets, we apply that price to a preferred share, and then we take a 10%-30% discount. My point is that we feel good about this NAV. In fact, we feel that our return profile of investing for 30%-40% will happen from where we're trading, where our NAV is marked. There's clearly something that's something odd going on here because we're trading at this enormous discount to the NAV. I mean, this is more valuing this and the reasons why behind this is probably more art than science, but I think we'll all agree upon that it comes down a lot these days to liquidity.
Is there enough liquidity in our portfolio to sort of fund the companies we have, et cetera? I think one worry around that is that we also have debt at VNV Global, and I'd like to touch a little bit upon that. Sorry, I'm going the wrong way all the time. We have about $150 million of debt outstanding, which I think doesn't mesh. I mean, compare that to an NAV of $850 million, and that's again, that's an NAV which is based on inputs from the listed world and with a discount rather than a premium, despite it being preferred shares.
If you compare also that debt to our cash position, this is at the end of June, our pro forma cash position, and pro forma we say because we sold some assets just after that. If you add that cash to the cash pile that we had end of June, we had about $170 million. That figure moves around a bit 'cause we are investing and there's some small exits here and there. Still, on a net debt level, it's we're in okay position and I feel maybe I don't.
Maybe this doesn't get across enough because I can sense that you have people looking at our market cap, it's $300 million, but then they see that there's $150 million worth of debt and how does this sort of hang together. If you dig a little bit deeper, I think this sort of situation is. I mean, you can sort of sense that it's not over-levered and there is liquidity to handle actually both the debts. The debt, I should also say, matures in 2025 and runs with a 5% fixed coupon in Swedish crowns. It's good.
The $170 million, of course, there's some of that we will use to invest into the companies that we have that need money. We've been very clear about that. We've estimated that to be about $40 million. We wrote about that in our last quarter report. Even if you subtract $40 million from that, there's still good coverage for that debt, especially since it's not due for another couple of years. Investing that money into the portfolio leaves a portfolio which we are very enthusiastic about. In fact, we feel that for many of our companies, we're on the cusp of moving into profitability.
If you allow yourself to look out a few years, we can't go into the models of our different companies. I mean, the public ones, like Swvl and Babylon, you have an idea because those companies will tell you. All the others, like Voi, et cetera, they're private. They don't share, you know, how 2024 or 2025 looks like for them. We know that we can't talk about each individual name, but so what we've done, as an attempt to sort of get you a sense of our portfolio at large is that we've aggregated the portfolio and how we see the aggregated portfolio move from loss-making to profitability. I was like, show you a couple of very simple slides, so bear with me.
In 2025, if you take the way we see our portfolio in 2025, and you compare that to our NAV, you take our base case, we're trading at a P/E of 18. If we get really conservative, that goes up to 26. Now, I've been brought up in a world long time ago now where P/E of five was expensive. From the old P/E, this is good, this is earnings, but it still looks a little high. If you factor in that in the years after 2025, we see this portfolio generating 65% earnings growth.
If you look another couple of years out into 2027, you get this sort of pretty attractive P/E ratios here. Of course, if you look at this and you compare it to our market cap, in our bear case, we're trading at a P/E of eight. If you look out another couple of years, then you're down to P/E ratios where even the old Per would have thought was interesting. I just thought that was good to leave you with, as you'll sort of meet our portfolio companies during the afternoon or during the morning and the afternoon. I think you'll get the sense that they're on this sort of journey to become profitable in the not too distant future.
That was my intro. On for time, we're fairly good. What I think we'll do is get ready for the next speaker. Dennis says that I should open up for Q&A. If there's. Sorry?
You mentioned Q&A. If there's any questions, live broadcast.
Right. Sorry, I forgot about this. The logistics. All of you who are watching us in Stockholm and streaming, you can also pose questions to us by punching them into what the-
There's a.
There's a line for questions. You'll. That'll be clear. Please use that. Those questions will be picked up by my colleague, Dennis. In the Q&As, we'll endeavor to answer those questions, some from the room and some from the internet. Okay, good. With that, I think we'll get ready for Fredrik. Yeah, Fredrik's here. Good. Fredrik's the founder of Voi. Well, I think we can say that we were very early investors into Voi, I guess from pretty much day zero. Many of you have perhaps met Fredrik before, but here he is again. All right. The way this works is that you. That is forward.
That's backward.
Okay. I'll try it. The mic, so that I can use-
Yeah, use this mic.
Hello? Yeah, you can hear me? Yeah. I'll probably do this one. No.
Yeah.
Great. First of all, thank you for having me, Per. Thank you for having me, VNV. I think I'll use this one instead. Yeah. Thank you for having me. I think it's my third or fourth CMD, second in person. The last one in person was in London, I think in 2019 at Babylon's office, if I remember it correctly. As Per said, VNV has been an investor in Voi since day one. I know Per and VNV through my time at Avito in Russia back in the day. It's close to 10 years from now, or yeah, seven, eight years back, at least. Yeah, I'm the founder of Voi Technology, and I am also the CEO. Founded the company together with three other co-founders.
Some of you might have heard me talking at the CMD or other presentations. Today I will talk a bit about what we have done over the last year, where we're going, and, as Per talked about as well, our recalibration from growth towards profitability. Let's kick it off. I think the three most important things to remember about Voi and what you should take with you, if it's only three things, is one, that we've been one of the fastest growing mobility companies in the world over the last couple of years. Two, Voi's changing society for the better.
Since day one, we founded a company with this ambition of decarbonizing, electrifying urban transportation, and continues to be core in our DNA, core in our vision, and the biggest reason why most of our employees are joining the company. Thirdly here, we have grown a lot, as I talked about, over the last year and a half. We have recalibrated the company more towards profitability. Since day one, we have had a heavy focus on unit economics, operational excellence, cost excellence, but have also grown really fast. Since a year and a half back, we have focused much more on profitability, and we're starting to see the benefits and fruits from that now.
As I said, yeah, the vision for Voi and why I founded this company together with my cofounders was really, yeah, to help cities and people living in cities to build cities made for living free from noise and pollution, as we call it. What is that about? It's about moving cities from the right-hand side there. This is a photo of Marseille, France's second biggest city. Heavily dependent on heavy traffic, cars, more than 50% of the city space go to parking and other space for cars and heavy traffic, to the left-hand side there. Lighter mobility, electric mobility, connected with public transportation, yeah, interconnected with other forms of sustainable transportation.
We have come some way now since we founded the company over the last four or five years. As I used to say, as we see it, we're in minute four, minute five in a 90-minute football game, so we're just warming up and getting started. We're super happy to starting to see this change actually for real in many European cities. Paris, Stockholm, Berlin, Amsterdam, are all moving fast now from heavy traffic to lighter traffic. On Voi, for those of you who don't know it, we started with shared electric scooters. You download our app, you find the vehicles on a map, you unlock them with your phone, you ride away, you park them, and then you leave the vehicle there.
Since then, we have expanded into shared e-bikes as well in quite a few of our cities. Also rolled out a refurbishment and resale program, where we refurbish the vehicles after a couple of years and then resell them to give them a second life. Since we started four years ago, we have done more than 100 million rides all over Europe. 11 countries, mainly Western and Southern Europe, as you see, and we're having a number one position in Europe in these markets. We have grown quickly, as I said. If you look at the left-hand side here, we came to market in 2018, in August 2018, where we did SEK 6 million, so divided by ten approximately, and then you get euros, more now with dollars. 2018, 6 million kronas.
2021, so last year, we did SEK 927 million, so around EUR 93 million. We have improved the margins every year since we started. From 2020 to 2021, we improved it from a negative 78% EBITDA margin to negative 43%, and we continue to improve it this year. We have added on a large user base over the last couple of years. If you look at 2021, on average, we have a bit above 700,000 users a month. When we look at the last months now in 2022, it's more than one million, as we continue to add on a lot of users.
What's been very, very encouraging to see is that initially, we saw that our main user group was men from the age of 18-35. As the product has matured, become more safe, sustainable, reliable, and so on, we see that we get more and more older users and also more and more female users. On the right-hand side, in our business, it's important also not only to win the consumers, but also the cities, and that's something we have been focused on a lot since day one. When we look at the tendered market share, about winning contracts with cities, how many contracts with cities have we won?
We see that we are the leader in Europe with close to 30% of the tendered market share, where the number two is close to 20%. We said from day one that we wanna build this business together with cities and together with the communities we are operating in, and that has really paid off now over the last couple of years. What we're looking at here is really a very, very quickly growing market. We see very strong tailwind now for the micromobility markets. As cities are moving more and more to sustainable transportation, they need to hit their climate plans for 2025, 2030.
In this market, we are the leader in Europe, and Europe is the most valuable market in the world as we see it today for micromobility. Infrastructure is more adapted, consumer mindset is more progressive, and politicians are more eager to do this change compared to, for example, U.S. cities, consumers and politicians. We think we understand the users and the cities really, really well now, and think we've built quite strong products, and continue to invest a lot in product and technology to build for the customers and the cities.
We are starting to have this big user base now of users who are using the service more and more and are improving unit economics every month, every year, moving into profitability now over the next couple of years. When we look at the market, we see a few things that really sticks out that pushes this market forward. We see that consumers are becoming more and more conscious in the mobility behavior. We see the cities, as I talked about, are moving actively and really pushing forward with their plans to move to more sustainable mobility. We see that the technology when it comes to batteries, when it comes to IoT technology and other things are getting mature and cheap, and that we see this continued trend of urbanization.
If you look at the trip distribution all over the world out there, you see that 60% of all trips are shorter than 8 km. That's really the sweet spot for micromobility. That's also a driver when you look at the right-hand side here to that e-scooters since they were launched in 2018, we were the first company in Europe, hit 100 million trips faster than ride-hailing, faster than car-sharing, and faster than shared bikes. The adoption of the last couple of years has been incredible. In this market in Europe, we are the leader.
When you look at the 15 key cities or the biggest cities for shared e-scooters and e-bikes currently in Europe, we're number one in 10 of them. If you look at the right-hand side here, if you kind of zoom out and aggregate market share in all the markets we're active, so Western and Southern Europe, we have around 23% market share. The clear leader in the Nordics and the U.K., number two in Belgium, Germany and Spain. Then we have a few nascent markets in Switzerland, France, and Italy where we're catching up now to get to the number one and number two position.
Also when we're looking at the market, we see that the market when we came live in 2018 was very unregulated, so there were no rules really around this. Over the years, we've seen more regulations coming into the market, so we've been very supportive of this. We have focused a lot on building products and processes for cities as well, and see that in this world where cities are moving from unregulated markets to more regulated markets where you need a contract to play and compete in that market, we have been the leading one. We have had a win rate in city contracts or city competitions on 65%, so 141 of these competitions.
We have a market share there of 28%, and we think this one is extremely important going forward as we see this trend continue. It's coming to Sweden, it's coming to Germany, it's coming to Finland and some of the other key markets. Over the last couple of years now, we have learned a lot about the users and learned a lot about the cities. What's interesting in this business, which makes it complex, which creates defensibility and moats around it, is that we have two very clear stakeholders. We have the users, the customers on the left-hand side who care about availability, they care about quality, they care about price and sustainability. On the other side, we have the cities that we're also working with.
They care more about safety, they care about parking. They also care about sustainability, and they care about working with trusted partners, so, companies that they can trust for the long-term. How we are thinking about building the business is that we try to understand these stakeholders very, very thoroughly and then build amazing products for them. Hardware, software, connectivity products. Starting with the hardware. Most of you might have seen the early generation e-scooters that we and others put out on the streets early on. It was more consumer-grade products. Over the last couple of years, we have invested a lot in product development to build more commercial-grade products that are really built for purpose, built for use, for what we are using them for.
The lifetime has increased from, say, half a year on the first models to five to six years on the latest models. The robustness, resilience on the vehicles is something completely different today. As we are in mobility, safety is key. We tend to think of ourselves as kind of the Volvo of micromobility, a heavy focus on safety. Here are just some examples of things we have done on both the hardware side and software side over the last couple of years to really improve the safety, both the actual safety of the service and also the perceived safety. It's everything from helmet selfies. You as a user get discounts and credits if you take a selfie with a helmet. Safety scoring in the app.
Drunk riding reaction tests. On Friday and Saturday nights, we run this drunk riding reaction test where you as a user before you ride have to do a drunk riding test. We built the special tires, steering columns, and lately also trying out computer vision to better detect and prevent drunk riding. On the software side, we have built everything in-house since day one. There is a lot more than this, but some of the key things is of course the app, which is everything about creating the seamless user experience, but also educating and to some extent using both a carrot and a stick to incentivize good user behavior. The IoT side, which is really the brain of the vehicle.
That's where we have the GPS, where we have full control of the vehicles, where we've also built in-house. On the right-hand side here, the in-house fleet management tool, which is really a command and control center for all our operations out there. More than 100,000 vehicles that we have full control over, to both do things such as fleet optimization, so demand prediction to make sure we have supply there. To having just full control and full overview of all our more than 100,000 vehicles. On the operations side, we have also full control.
We believe in the circular operational model, where we control everything from sourcing where we source the vehicle and IoTs both from Europe and Southeast Asia to fleet management, which is all the operations out on the streets, where we either do it ourselves with our employees or logistics partners, depending on the market. Fleet maintenance, so it's basically our warehouse operations. We're running operation centers and warehouses in all our countries we're operating. Where we are running it fully in-house, we have built special-built software processes and so on to really optimize them for efficiency. The last step here is the fleet resell.
After a couple of years where we see that the vehicles aren't really competitive out on the streets, we refurbish and resell the vehicles. The user base has grown a lot. In 2019, we did 15 million rides. In 2021, we did 64 million rides, so 4x over those two years. What we're also seeing, which is very encouraging, is that we see that our users ride more and more. If you look at the 2020 versus 2021 number, there you see the mid-blue one, you see that our users took more rides. The users who became users in 2021 took more rides in 2021.
Users who became users in 2020 took more rides in 2021 than what they did in 2020, and we see that continue. Looking at the financial profile, we talked about the revenue side already. Grew to around SEK 927 million in 2021. Continue to grow in 2022. When we look at the profitability side, what we call vehicle free cash flow, which is revenues minus payment fees, charging and logistics and repair costs, we saw that growing from SEK 102 million to SEK 282 million from 2020 to 2021.
When we look at the EBITDA margin, we saw that improving from negative 78% to 43%, and we continue to see that improving this year. Now the focus for us over the next years is really to bring this company to profitability. We will continue to go deep in cities and countries where we are rather than expanding all over. We will focus on both increasing the customer base, but mainly increasing ridership and increasing retention in our relatively big user base that we have out in the markets today. We see consolidation coming up, and we will be optimistic if we see the right opportunities there.
Eventually also, what we're seeing is that the opportunity in micromobility, not only micromobility for people and shared micromobility, but broader micromobility, both for people, think of shared micromobility, think of D2C subscriptions, but also for things. Think of micromobility for last mile delivery couriers and so on. That opportunity is massive, and we wanna tap into that opportunity now over the next couple of years, from this now quite big base, sustainable base, and really catch that demand and opportunity in Europe. Three things to take with you. One, we continue to grow very fast. Two, heavy focus on broader ESG and be net positive and good in the societies we are acting.
The third one, with scale and with improved products and the efficiency across the company, that we're moving into profitability as well now over the next couple of years. With that said, thank you.
Thanks, Fredrik. Now we go to Q&A. We're way ahead of schedule, with lots of time. I think Dennis has one to kick us off. I don't know.
Thank you. As you said, you initiated a cost-cutting initiative earlier this year. One, could you tell us a bit more about that? You know, what you're targeting, how far that will get you. Then also, you know, what about the revenue growth that you expect in the years to come despite doing this cutback now?
First on the cost-cutting, or cost reduction, question. Earlier this year in May/June, we announced that we did a cost reduction program with the goal was and is to take down our overhead cost base with 25% on a runway basis versus where we were in May/June toward December. We're tracking well toward that. I feel confident that we will, we'll hit that goal. Your second question was around where the growth will come from. To me, it's quite easy. We see that only in Europe, we believe there are 450 attractive cities for our type of services. Currently, we are live in 100 of those.
There's a massive wide space, and most of these markets aren't really open yet due to regulatory reasons or other reasons. We expect them to open up over the next couple of years, similar to what we have seen in many of the markets we're on today that weren't open, say two, three, four years ago. That's one thing. There are a lot of cities out there. Two, there is a massive opportunity also to grow to go deeper in the markets we are, both with our core business lines, so the shared e-scooters and the shared e-bikes. Also, as I mentioned, some of the other business lines that we will look at over the foreseeable future.
Thank you for the presentation. Two questions, one which you can ignore and one which maybe you could answer. The one that I would like you to answer is just to drill a little bit deeper on the recalibration from growth to profitability and maybe define what you consider to be the right profitability metric. The question you can ignore is to explain to us vehicle free cash flow, because I didn't quite understand that metric. Thank you.
Okay. Let's start with the first one. Profitability and what's the right metric to look at? The right metric to look at is, of course, net income.
Yeah.
We have been thinking about it since day one. First we need to figure out unit economics. Unit profitability, which we have done over the last couple of years. For us it's about city profitability. You know, we fully know that city profitability on an EBIT level, then country profitability, then regional profitability, and then that needs to cover for the overhead cost base we're running. Yeah, it really EBIT. Does that answer the question?
Yeah. Okay. I guess my follow-up to that would be when do you expect a city to become, to hit your city profitability metric?
Already last year we had four countries that were fully loaded profitable on an EBIT level. We see even better profitability margins and levels this year compared to last year. We expect several countries and regions this year as well to be EBIT profitable. That's good.
Thank you. Stefan Bolt from Pareto Securities. I have a question regarding consumer behavior. Have you seen any sort of changes? I mean, if we're going into weaker economic climate, has the consumer reacted or changed their sort of spending patterns on communication? Have you seen any sort of signs of that so far?
Not that we can specifically pinpoint its user service and so on. We continue to see strong usage going into the last couple of months and now going into fall as well. We haven't really seen that, at least. What we have seen and heard anecdotally, though, is that there's some kind of downstream move from taxi, Uber, Bolt, ride-hailing, which is by default more expensive per kilometer, especially if you're one or two riders, compared to micromobility.
One question that has come through the broadcast from several people is about the competitive landscape and how you see that evolving for micromobility in the years to come. I guess more specifically, Eminent, do you see that happening and what type of performance is Eminent?
Good question. No, I think, I mean, would be good for the market with some consolidation. I think in Europe we see a couple of years ago we saw probably 20 contenders for winning Europe. Now we're down to four or five, something like that. We see a long tail of competitors, especially on local and regional level in some markets. Yeah, we definitely expect some more consolidation, especially now as capital is becoming more tight than one to three years ago.
Thanks. A couple of questions. In terms of your funding, you talked about reaching profitability as a group in two to three years. Are you funded through to that period? Or do you need to raise more capital from what you see in terms of your growth opportunities at the moment?
We raised capital end of last year in December last year. One of the reasons or a big reason why we did a cost reduction earlier this year was to have good runway, not be dependent on external capital. I think to really hit the vision and the ambitious plan, we would raise capital again for sure. We also wanna be in control of our own destiny and not have to raise capital now over the foreseeable future as the markets are very shaky.
On another topic, have you seen any European cities think again about micromobility, particularly with regards scooters? I was reading the other day a small city in the U.K. is going to terminate e-scooters because of safety, people riding on sidewalks and whatnot, getting pedestrians hurt. Is that isolated or are you seeing any other cities rethink their adoption?
Which city was it?
Canterbury.
Canterbury.
Not one of your cities, but.
No.
Another operator. Yeah. Yeah.
No, I think, yeah.
Small city. It just made me think about, is there a trend we need to watch carefully from a safety aspect?
I would say it's a trend we have watched very, very carefully since day one. I mean, one of the biggest risks for the business, as we saw it early on, as this industry didn't really exist, like shared e-scooters and shared e-bikes at scale didn't really exist. Will this be banned? Will this be welcomed, and so on? I think what we've learned now over the last couple of years is that cities, as long as we can control the things I mentioned there that cities care about, safety, parking, cluttering, good operation, sustainability, and so on, cities are very pro micromobility and see it as a tool really to reach their climate plans and as an important part in their mobility portfolio.
They're prepared to tolerate some. I mean, obviously there are accidents with all types of vehicles, but they're prepared to tolerate that as they pursue those larger aims, is what you're seeing?
Yeah. That's what we're seeing when we look at the pan-European level and aggregate it.
Thanks a lot.
Hi. You have a strong market share in the U.K., but you guys didn't win the London market. My question is, what did you learn from this experience, and how do you ensure that in future large market tenders you're in a stronger position? Also, looking out towards the rest of this year into 2023, what large markets in Europe could be up for tender, and where do you expect to participate?
That's a good question. For context there, we have approximately 60% or something like that of the U.K. market. We don't have London currently. London is complicated since it's built up by 30 boroughs. It's difficult to get these boroughs to coordinate and so on. Unfortunately, around two years ago, we didn't win that contract license with London. Yeah, we learned a lot from that one and really refined our offering when it comes to hyper-localizing the service and the solution to these bigger cities, to these important cities.
Since then, I would say we've had a very good win streak so far this year, and with one of the biggest ones, the most important one was Oslo in Norway, which a bit surprisingly is one of the world's best markets for micromobility. As always, you win some, you lose some, but the most important thing in the long-term was really to kind of do a retro and learn as quickly as possible and then move on and implement that in the next bids, which I think we have done.
When it comes to other large cities coming up now, we have Madrid, we have Rome, we potentially have Stockholm, Milan, and quite a few other really big European cities. It's gonna be an exciting next six to 12 months.
Thank you.
Bye.
Hi, George Wilson from press, two questions. The first will be on the market stock. How has that changed? Are there any limitations on parking and so on? And also, do you think that Stockholm is a good example of what other cities will move towards in terms of regulation of the number of licenses handed out in terms of parking and in terms of the cap on the number of scooters you can put up on streets? Thank you., of course.
You mean Bird specifically or just overall?
Specifically.
Bird specifically. I think we are much more efficient. We're winning more city licenses, and we're getting more rides than them on a city basis. That's the short answer. I think what it goes back to is really what I showed there before. If you understand the customers and the cities really well, and you have an organization that's fully focused on building world-class solutions for them, and then this is an execution. Again, product market fit is there. The market is growing. Demand is out there. You need to execute better than your competitors in all these different verticals and different phases of the business, and that compounds up to a huge advantage.
When we compare ourselves to Bird now, we see that we have been significantly more efficient on capital. We're winning most of the city licenses I talked about. On a city-by-city basis, we're typically beating them on utilization and market share.
The last question. Last question, I guess from the broadcast. The question is more specific around hardware and if you've had any issues with supply chains, but maybe we can broaden the question. You can talk about distinction between hardware and software in this industry and how you see Voi is positioned there.
The short answer there is that, over time, we see most hardware being commoditized, so it's very easy to copy and steal and paste hardware. If we come up with something new on the hardware side, we know that in six to nine months a competitor or a factory will have copied this. On the software side, that's much, much more difficult to copy. How we think about it is that we build this very scalable software and data platform upon we can add different modes of hardware.
It could be e-scooters, it could be e-bikes, connected with our IoT, and it's really on the software and data side to build the competitive modes and the kind of features and the secret sauce that's very difficult to copy. The hardware side will be commoditized over time, is what we think.
One last question.
Okay.
Is the cost of electricity relevant? Is that a significant part of your cost of goods? Do you need to pass through these recent spikes?
Also great question. It has been an insignificant part of the cost of running the business. Less than 1% of our costs and operational cost has been electricity. It will of course be slightly higher now, with you know increasing energy prices, but still not significant part of the operational cost. Thank you.
This is the last question, promise. Would you consider going into services sooner? That would be rentals or fleet management or any other types of services rather than just the rental or the long-term rental that you're doing today?
What are the types of services you-
For instance, you know, longer- term rentals to. For delivery companies, as you mentioned, it could be fleet management for other operators. You know, broader in the mobility stack, but where Voi would be the service provider and not have the actual scooters.
Oh, yeah. Yeah, great question. I think as I mentioned during the presentation as well, we believe the opportunity in micromobility is massive, but we're also big believers in focus, so we're really doubling down and focusing on the core now, yeah, for the remaining part of 2022 and 2023, and then we'll see where we are towards the end of 2023.
Thank you, Fredrik, very much. Thanks for all the questions. We will now switch speakers and listen to Mustafa or Youssef or both maybe, who will talk about Swvl. In this switch, if you wanna grab a coffee, you can, but be quick 'cause you don't wanna miss this guy.
How are you doing? All well?
I'm great.
Perfect.
That one is forward.
Perfect. Yeah.
That's back.
Amazing. Thank you so much.
If you can go ahead.
I can start?
We'll cover the first one 'cause we're running on the hour. People switching on.
Amazing. Perfect. Is this one working as well? Can I just switch on it?
You wanna copy to that one? You can. We will switch it off. This one works. Make that better.
Can you hear me well?
Yeah?
Amazing. Perfect. Thank you so much for taking the time and being here. Really appreciate it. I'm Youssef, CFO of Swvl. Great to have you here. Starting with just a quick intro on Swvl, right? Sorry, get this working. Obviously you've got kind of all the great ride-hailing companies, Uber, DiDi, Ola, Lyft, et cetera, around the world making kind of mobility more reliable, more convenient, right? But making it so predominantly for the one percent of the population who can actually afford ride-hailing, right? Or afford any form of private transport for that matter, right? Whether it's owning your own car, whether it's taking a cab or ride-hailing, right? Especially in emerging markets, right?
If you're a doctor, engineer making on average $500 a month, if you need to spend $20 every day to go to work and come back, it's just simply unaffordable for the vast majority of the people. Similarly, on the supply side, you've got kind of ride-hailing companies solving the problem predominantly for four-seater cars, freelance gig economy workers, guys who have cars looking to make a bit of extra income. But it doesn't solve the problem for the very large number of commercial drivers, right? All the bus companies and individual drivers who own minivans, mini buses, seven-seater, nine-seater, 15-seater big buses. Who basically are not working on Uber, right? Who also suffer from a great underutilization of vehicle. You own a school bus, you take the kids, bring them back at the end of the day.
No other work during the day, no work in the weekend, no work in the summer. You work with a corporate, you bring employees and take them back. You work with the tour agents, you work only in tourist experience. Basically, the idea is kind of was creating kind of an Uber-like platform at completely asset-light marketplace. Instead of having it basically for four-seater cars for gig economy workers, having it for high capacity vehicles. For mini buses, mini vans and buses, for commercial drivers who work full-time on these vehicles. By doing that, we're basically able to offer kind of the same experience. A ride is air-conditioned, you can book it by the app, you can pay by cash, card, all the drivers are pre-cleared, et cetera, et cetera.
You basically end up paying 80% less than an Uber, right? Basically, the same 30 km or 25 km ride on an Uber in emerging market that will cost $10 would instead cost $2 in Swvl, right? You can go to work and come back every day, even if you live 20, 30 km away for kind of $4 a day. Hence making it kind of very affordable for the vast majority of people. Then on the other hand, for commercial drivers, allowing them to cater for all forms of demand on the same vehicle, right? That same vehicle can do a 7:00 A.M. university trip, a 9:00 A.M. corporate trip, a 12:00 P.M. shift for a call center, a 5:00 P.M. going from one city to another.
Hence, the vehicle is constantly utilized, makes much higher earnings, and people are kind of paying significantly less. Sorry. Basically, we try to kind of deliver three things, right? One is accessibility. By making it 80% cheaper by effectively pooling people together, we're having the vast majority of people can afford it. In emerging markets, people are kind of generally kind of sandwiched in between private transit, which is unaffordable, and the public bus, which is often broken, doesn't run on a schedule, et cetera. Because obviously governments, and increasingly so in the times we live, governments are very under budget, under constrained, et cetera, and hence not able to invest in sufficient capacity, right? A place like Cairo, the capital of Egypt, where we started, it's a city of 30 million people served by 3,000 public buses, right?
It's one bus for 1,000 people. You can imagine the level of congestion, the level of harassment that results in, et cetera. By being able to have that private affordable service, we're able to make it accessible for everyone. Second is reliability. What we do is seven days in advance, we give people a commitment that they will be picked up from a specific location at a specific time and dropped off in a specific location at a specific time. That's basically where really the bulk of the technology is, right? Is in that kind of demand estimation, routing, and planning to be able to offer people this reliability, which otherwise predominantly, again, emerging markets, people really don't have. Last is efficiency, right?
We're able to run these vehicles at 90% utilization on average, which means on average, we're able to consistently pool 13, 14 people together, and that's where kind of really the economics come from, right? Instead of every person paying $10 on a car being alone, you have 13 people paying $2 each. They're paying 80% less, but the vehicle is making $26. The vehicle is making more than 2.5x what the Uber vehicle is making on the same trip. That's what allows the drivers to have higher economics and allows us to have higher margins as well. Sorry, I promise I'll get this right before the end of the presentation, which one is which. We started in Cairo five years ago. We're now the largest asset-light mass transit operator in the world.
We move 300,000 people every day. That translates into 120 million people kind of annually. Kind of 120 million bookings annually coming on Swvl, coming from three million direct-to-consumer customers, as well as 400 enterprise customers. Universities, airlines, factories, corporate, schools, et cetera, who basically kind of use our platform to move people around. These 100 million bookings translate into around $130 million kind of annual top line. We operate across 20 countries. 10 countries where we have our own asset-light marketplace. We actually have supply which is available for booking on the Swvl platform. These are predominantly across emerging markets.
10 countries where we only license the software to basically other bus companies, to governments, to kind of make their own operations more demand responsive and more efficient. That's kind of predominantly in developed markets. In terms of kind of the key focus for us. Obviously, one is on the tech side. Basically we're kind of in addition to kind of being the largest in that space globally, we're basically the only player who has kind of an end-to-end routing for mass transit. Basically, we do fixed routing, that's the classic kind of government-type system, where basically there are fixed stops at fixed times. What we do here is just we basically optimize these.
Rather than have the same fixed route being fixed for years and not changing, this fixed route can basically be different in the summer, it can be different in the winter, school day, weekend, et cetera. You still don't need an app to book. You can just have a station coded, but the stations themselves can be more optimized, can become closer to you. Second is the flexible or the dynamic routing, which is basically the virtual stations model, which we use on our own kind of marketplace. Where basically we have thousands of virtual stations across the city. Every corner, every place where it's safe for a vehicle to stop is a virtual station. Then only if a person basically is trying to book, that virtual station gets activated.
By doing that, rather than the bus kind of constantly stopping in places where maybe there's no one, in places which are far away, depending on who are the actually 15 people who are gonna be on that specific ride, where they live, the vehicle will make a stop in these specific spots. The last is a completely on-demand. Which you can think of it as an Uber Pool, but on a minivan. Again, to make it basically even cheaper than what an Uber Pool looks like. That's kind of just a summary of all four of them. In terms of kind of where we are today.
Basically on a quarterly basis, that's kind of the numbers from our last quarter. We make around $30 million of top line quarterly. That's coming from us basically making 24 million seats available on our marketplace. Being able to get to almost 90% utilization of that with 23 million bookings. We're basicaly already contribution margin positive across all countries globally. We're almost at EBITDA positive now across pretty much all the countries of operations.
For us, basically what's left is recovering the central R&D and the central kind of CapEx that we spend on just on technology, basic technology CapEx, to be able to get to kind of full free cash flow generation. Just to give you perspective on kind of our growth, we've been growing kind of on average between 3x-4x year-over-year, including kind of in the last few quarters. We basically stand at around 3x our kind of pre-COVID peak as well in terms of size. This is split into around 70% of it is on the enterprise segment, which is basically one- to five-year contracts with institutions, and then 30% of it is direct to consumer.
Again, partially subscription and partially ad hoc. This is kind of again similar trend on the number of bookings that we make, where the growth is slightly higher. This year we've had 25% kind of blended currency valuations across the countries in which we operate. So obviously we've been growing faster in terms of underlying bookings and in terms of the dollar revenue. Just on a constant currency basis, the growth will become even much higher than the 3x. Again, in terms of capacity, we're obviously kind of growing our bookings higher than capacities. We continue to kind of improve utilization over time. This is our enterprise business. We have basically 370 unique customers.
This kind of range from everything from governments, the TMB in Barcelona, the transport authority, the airport in Munich, etc., to bus companies, private bus companies. Citigroup in Kuwait, HP in Brazil, to the biggest corporates, white-collar. We have Amazon, Orions, Nestlé, Unilever, etc. Some of the largest blue-collar. For example, places like Egypt, the biggest factories in the country, Eastern Tobacco, Oriental Weavers, etc., universities, schools, etc. Basically, you can see here we're looking at 125% revenue retention on this.
Basically the way kind of this model works is they contract with us, and then all their employees and students get a subscription or a pass to basically be able to use the Swvl kind of vehicles on the Swvl marketplace, whether in dedicated trips just for that client or co-mingled trips between different clients or open loop kind of trips where basically just the employee has a subscription, they can use any route that's available on the direct consumer tab. We talked about profitability, so we can kind of skip that. Basically just kind of very quickly, what you can see here is basically the ability to continue to grow kind of markets kind of double-digit month-on-month while being able to improve profitability.
I think that's a function of kind of the network of scale, we're now able to achieve. Just to give you that kind of a snapshot of how our presence looks like. Basically organically, we've expanded across Middle East, Africa, and South Asia, and then via kind of a roll-up play where we've consolidated five other players in the market, which you can see at the bottom across Germany, Spain, Turkey, Argentina, and Mexico. We've done share swaps with the largest five players there in the last few months. Basically consolidating that space globally, becoming the largest in it, and basically kind of the only player that's publicly listed.
We talked about kind of a snapshot of some of our kind of global clients, whether on the corporate side or on the governmental side. This is just to give you a snapshot of kind of the type of post-merger integration we're able to do in the last few months on these five acquisitions. Basically on all of the business we acquired, top line is now kind of more than 2x, et cetera, because of being able to now integrate our technology and then basically and using their commercial presence and as well being able to significantly improve profitability off the back of the optimizations we're able to bring on the routing side, which is our core technology. Just some snapshots lately, et cetera.
The last G7 in Germany, the media charter, 2,500 people were basically powered by Swvl in the back end. We continue to obviously engage with governments globally and basically using the Swvl technology to power the operations. In the meantime, we continue both our organic expansions. Some of them are just pure SaaS expansions like in Kuwait, where we don't have any team on the ground. We're able to just participate in global tenders kind of by governments, by large companies and being able to win contracts, and hence we're able to expand in a very high margin, kind of no presence on the ground, no cost, as well as continuing kind of our M&A share swap-based program. Yea h, that's a quick snapshot. I would love to answer any questions you have.
Thank you, Youssef. Maybe to start, similar question to Fredrik and Björn, you also announced a cost optimization program back in May.
Yes.
Maybe you could walk us through a little bit on that route, where you are and on that ambition hitting profitability earlier in 2023?
Definitely. I think when Swvl started, it started as a consumer business, right? As direct consumer business. When it started, it was really kind of an Uber for buses, right? Obviously that requires a certain level of spend on customer acquisition, on building kind of scale. You guys know the story, kind of building that network effects and getting to a level of utilization where you're basically able to turn profitable. Obviously we don't have the luxury of kind of taking 14 years to do it, right? Obviously we need to do it within, kind of we needed to do it within four years from starting the Swvl operation. Obviously now we need to do it within kind of nine months of where we stand today.
Hence what we're focusing more and more is the enterprise side of the business, right? We're basically saying the ultimate use case is the same. I want to move the person, and they want them to be able to go to work and go to school reliably, efficiently and safely. Instead of basically targeting them directly, targeting them digitally, spending on customer acquisitions or promo codes, we'll just target the institutions where they work and go to school, right? We target their university, their school, their corporate. We'll go and sign the corporate up, let the corporate pay, and then let the employee have a subscription off the back of the corporate.
What that means is the customer acquisition cost is really much more on the sales side, which is commission-driven, where it's basically much more absorbable vis-à-vis the digital and the promos and all of that. It also kind of means that obviously from a payment perspective, we have more attractive payment terms, we have more attractive margins, et cetera. It obviously doesn't give you the same exponential growth that the consumer gives you, which is kind of on the consumer business, obviously only as good as your technology and marketing. Whereas on the enterprise side, there is actually a certain kind of sales cycle that we need to go through.
That's a business that typically grows 2-3x year-on-year, as opposed to consumer, which grows 4-5x year-on-year. But obviously it grows kind of very profitably and allows you to price these contracts in a cost-plus basis. Basically what we've done at the end of May, kind of given the overall capital environment, is we've moved away from a 50/50 consumer enterprise balance into only a 30 consumer and 70 enterprise, right? Basically what we're doing is we're focusing the consumer in places where we already have a lot of density and network effects, which are predominantly Egypt, Mexico and Pakistan, because these are our three largest markets.
In all other 17, focusing just more on the enterprise and the SaaS, because even at small scale, these businesses still cannot compete even and be profitable, as opposed to direct to consumer, which needs more scale. That strategy was basically two legs. The first leg, which happened from May until now and is largely complete, is using that to get all countries to basically local country EBITDA, right? Basically stop any burn inside the countries, and that leg is largely completed. The other kind of main leg ahead of us for the next 9-12 months is how do we get these countries to provide sufficient cash flows to absorb the burn at the central level, which is predominantly on the R&D, right?
We have around 300 engineers, product data scientists, et cetera, who form the bulk of that R&D, located in what's still relatively very attractive places like Egypt and Pakistan. Still it's a major cost, plus obviously all the kind of corporate listing costs, et cetera. This is around $2.5 million of monthly costs that we kind of have to incur from an R&D and a corporate perspective. Now it's all about kind of adding $200 thousand-$250 thousand of monthly incremental EBITDA at the country level. Within 9-12 months, we have enough cash flows coming from the country to basically be able to recover that central R&D and that central cost and get to kind of a full cash flow positive at the group consolidated level.
Thanks. Good, thanks. You already touched upon it a little bit, but this shift from B2C, now to B2B-
Yeah.
I guess the split is what, 70/30 now.
Yeah.
Will you know, keep the B2C business alive? You think that, you know, we will push that in the future? Or is this, you know, terminal shift towards B2B?
Yeah. No, it's not terminal. To be honest, I mean, our DNA really and where we started came from the B2C side. The underlying mission is that wherever you are, regardless of your income level, regardless of who you work for, you should be able to access kind of reliable, affordable, and convenient transportation, right? Basically, the thesis is that should not be predicated on basically where you work or where you go to school, being able to sign up with Swvl, right? You may be working for an SME, you may be a self worker, you may be someone who just doesn't have enough. Like, you live in a place where Uber doesn't have enough scale to move you, et cetera. The idea is not to limit it to that.
I think that limiting it to that is in the short term, more tactical, because basically we need to have enough scale to be able to kind of to make each contract and each operation, each route profitable. That's a business that we'll obviously continue growing. The consumer itself, in terms of slowing that down, limiting it to the existing mega cities we're in, like Cairo, Pakistan, Karachi, Mexico City, et cetera, is more tactical in the short term.
Once basically we're cash flow positive, the idea is to reinvest these cash flows in relaunching new B2C routes, and then basically this is where we see kind of growth starting to accelerate again from the, let's say the slower 2x year-on-year back to kind of 3x-4x year-on-year as we're able to do that.
Good. Any other questions for Youssef?
No. Chris, I'm here. Youss ef's company, Swvl, is listed here on Nasdaq.
Exactly. Nasdaq, ticker is SWVL.
When did you list it?
31 March.
31 March. Like, a lot of stuff, it's been a little wobbly out the door, but.
Yeah.
Good prospects. We are very excited.
Thank you so much.
I think that will allow us for a 10-minute coffee break before we listen to Nicolas from BlaBlaCar. Let's reconvene here at 10 o'clock. Thanks. We'll reconvene with our next speaker, which is Nicolas Brusson, who's the CEO of BlaBlaCar. BlaBlaCar is our oldest investment of all, everyone who's presenting here today. But it's gonna go on for a lot longer, I think, in our portfolio. Anyway, without further ado, over to you.
Thank you, Per. It's the oldest investment, but I just joined BlaBlaCar six months ago, so I'm the newbie. If I go back to the origins of the company, why we exist, of course, there's the CO2 emissions topic, but the truth about the BlaBlaCar origins is a French strike. One of our founders wanted to make a train ride, and there was a French strike, so he wanted to take a bus, but there was a French strike. He had to take the car, didn't have a driving license, had to ask his sister to drive him for a five-hour long drive. The sister was a bit pissed off. When he ended up into the car, jammed traffic, he witnessed that all of the cars were mostly filled with one driver and only empty seats.
He was like, "What? Well, it doesn't work like this. First, it's a nonsense from a carbon emission footprint standpoint, but more importantly, I was willing to pay, and I'm sure there must be people driving the car willing to receive some money." That's how it started. It started with carpool, but we'll see that we've evolved from carpool to other means of transportation into multimodality. What's our vision? I think it's important to state from the other mobility players. One of the key aspects of BlaBlaCar is that we're aiming at bringing people together. It's a shared drive. You know, we've extended into buses, we'll extend into trains, but from carpool to bus to trains, you never travel alone. It's all about bringing people together.
It has some economic consequences to the business model of the company, especially on the carpool side. Of course, zero empty seats. You know, filled seats are, you know, carbon savings and better economics for BlaBlaCar. All good. What we aim at becoming, we started with the long-distance carpool model that I've just briefly described. We're moving into bus operator as a marketplace. We're into commuting, so shorter distance trips, but it's not micromobility. We're talking about, roughly speaking, 30-50 km drive. We'll get into train mostly in Western Europe by the end of next year.
For all of that, those supplies, we've built a platform which for the time being is a multimodality platform, meaning you want to go from A to B, and we are offering either a carpool ride or a bus ride and soon a train ride. What we aim at becoming from that technological platform is an intermodality player, meaning we interconnect means of transportation. When you want to go from A to B, if there's not one single supply that can allow you to do the trip, we will interconnect several means of supplies. If we manage to do so, within the short period of time, we will become a unique platform for the suppliers themselves, offering us a leverage on the tech rates that we can take if we're talking about bus operators or train operators.
Of course, having the carpool mortar through those bricks is what positions us as a unique player to achieve that intermodality model. Right now we'll get back to a few numbers, but we're present in 22 countries on three continents. We have 25 million yearly active users over the past 12 months, and the past 12 months do not show the full recovery post-pandemic. We are already in six countries multi-modal, for the time being, carpool, whether long or short distance, and bus. In Western Europe, we'll be multi-modal with trains by the end of next year, and we're expanding the bus into emerging countries, and we'll get back to that.
The market size and market opportunity of where we are, I mean, funnily enough, preparing for that presentation, the $240 billion TAM for bus and trains worldwide, I saw a presentation from a company I won't name. They said $1 trillion. I'll go back to the team and tell them, "Guys, maybe we're underestimating the TAM potential for us." What's also very interesting in that slide is that the 74% of cars that are used for long distance trips are not valued into the TAM market today. The capacity to share your ride, reduce the number of cars on the street, or on the road, I should say, and have people sharing the cost is not valued into the TAM market.
All in all, the potential is huge, and it's for us to grab basically. Did I press the wrong button?
I don't know. There we are there.
There we are. Usually I don't like comparing with others. Here it's not to say that they are bad, it's just to show what's unique about our platform. I mean, first of all, is the carpool solution. We're the unique carpool platform globally. You may find some small local players, but having something which has a global reach that we have is quite unique. First of all, we built those user bases, especially in Western Europe, at a time when the cost of acquisition was much lower than it is today. The barriers to entry in Western Europe has increased tremendously for that carpool user base.
Second, given the scale we've reached today, the barriers to entry to someone trying to copy us on the carpool side would be extremely high, not to mention potentially not even profitable in the long run. We focus mostly on long distance, and the longer the distance, the bigger the unit economics for us. Having longer distance trips is one of the KPIs we start monitoring. We have a marketplace model, so we have no CapEx, very, I mean, stable, fairly stable cost. We have a very low reliance on paid traffic. I'll get back to that, but it's mostly an organic audience that we have. All in all, we have a very sound financial business model with a unique carpool positioning to be able to extend into this multimodality model.
Why do we think we will win? As I've just mentioned, only 5% of our traffic is paid. 95% of the traffic on the BlaBlaCar platform is purely organic. Even as a CFO, sometimes I think we pay too much for the 5% remaining, because I'm not even sure that it can change the scale. Basically sometimes by simple, I mean, easy to say, but by PR and public relations, we even have a better impact on the usage of our audience than by spending marketing. Second, remember I said it's about sharing? We have very high NPS, which is about 40 in 2021 from our customer base. That NPS comes from the fact that it's sharing. None of the
If I take the couple model, the drivers, none of them are in for profit. They're in for cost-sharing. Cost-sharing is very important, but sharing is also sharing the ride, meaning is also very important for them. We need to really keep that in mind not to try to monetize too quickly. We could improve short-term the profits, but potentially destroy the long-term value that we've built with that sustainable user base and audience. Which shows into the retention. That's a GMV retention, not a user retention. Basically, we use, you know, Airbnb as a benchmark because we think it's a very good company in that respect. All in all, what we're trying to say is on the right-hand side, you have the drivers carpool retention. The GMV is above 100% after five years.
Basically, it's a very, very. Of course, we lose some drivers, but with the increase of frequency of the remaining drivers on the platform, we managed to have a GMV retention that is above 100% after five years. On the passenger side, we have a more natural decline, but 50% retention after year five. I used to come from the gaming industry, and 50% of day one was a good CA-KPI. Here we're 50% of five years, which shows the extremely strong resilience of the even passenger side audience that we have. Like, the alignment of stars for BlaBlaCar is fairly unique. The macro trends are for us, I mean, they're not necessarily good signs if.
especially if I talk about the oil prices, but they all benefit the business model. First of all, climate crisis is prompting governments and customers to act. It's a match. It's a matter of having the right momentum on both sides of the audience, customer base, and the governments. If I take the example of the French government, they're going to announce that they will subsidize quite significantly new drivers on carpooling in France. Funnily enough, carpooling in France is actually BlaBlaCar. They won't say BlaBlaCar, but they will pay people to carpool to create the incentivize. Willing to share assets has become mainstream. Oil prices, you know, I said it, they are not here for profit or drivers, but sharing cost is very important.
Given the oil prices trend that we've witnessed, it has increased quite significantly the inbound of new drivers and therefore supply and demand on the passenger side. One point I didn't mention yet, on the bus side, the marketplace, we are more geared towards emerging markets in that respect because there's a shift from offline to online booking. The incumbent operators, they are really offline players, and they don't know how to make that shift. There's a play today to online the booking of tickets on the bus side in emerging countries with a very strong penetration rate year on year. That combined with our carpooling platform creates a lot of synergies, which goes back to the organic traffic that we have as opposed to paid for traffic.
Now what are we going to implement over the next few years? I mean, first of all, out of our packs, so about close to 60 million packs over the past 12 months, only half of them are monetized. We're a C2C model in carpool. Before we can monetize a country, we need to create the liquidity, enough liquidity such that we have the supply and demand that match each other. We give it a few years for each country we enter into, and we don't take the fee from the platform. People pay themselves on the platform, but we don't take the fee. We let it grow until a level when we feel we can start monetizing. Today, half of the packs are not monetized. Over the next three years, we will monetize that audience.
It's not an audience that has the same value as the first 30 million because it's emerging markets, so the unit economics are not as high. On the other hand, it's an audience that is growing at 2x, 3x, so very, very, very high growth rates. Next three years, we'll monetize Brazil, India, and Mexico, starting with Brazil, early next year. Second, starting with carpool at the bottom, where it's our product that we will build and implement in countries, organically. We'll add to supply buses or trains, depending on the countries. That we will do organically or through M&A, depending on the opportunities that arise. We have a few ongoing topics. We still need to go for the organic routes because you never can bet only on M&A.
If we can accelerate our growth through an M&A in a specific country, let's say, buses in one emerging country, we will just save a few years in our growth plan. Few metrics about the recent development of the company. Very few metrics. First of all, we grew our unique yearly active user base from seven million in 2015 to 25 million over the past 12 months. Once again, the past 12 months do not show the full recovery post-COVID. More importantly, we've diversified that audience through the various continents. LATAM is growing very fast, Brazil and Mexico. We hope to increase the share of LATAM, and next time I'll do a presentation. Few figures we don't communicate.
We're a private company, we don't communicate too much on P&L. What we can tell you is we've doubled revenues and gross margin in 2022 versus 2021. I mean, we will. Profitability is here, meaning putting Q1 aside, we're profitable in 2022, and we'll be profitable in 2023. We have a net cash balance of SEK 130 million. Given that we'll be in positive territory in terms of cash flows, that is the resources that we may use for the M&A I was talking about. Because being private, using shares for M&A is always tricky, so you need to have a portion of cash, and especially in current environments, having cash available is a strong plus.
In a nutshell, very short, this is what I could tell you on where we are.
Thank you so much, Nicolas. Let's open up for questions. I think my colleague, Dennis, has some.
Great. Many, many thanks. I guess starting a bit on, you mentioned a bit around monetization and I think it was in the what's to come section. A question there is, you know, to what degree have you actually started monetizing, if you look at the total opportunities, so to speak? And what impact are you seeing on demand as you start monetizing?
Okay. In terms of audience, 50% of the audience that we have today is monetized. That is 30 million against the 28. When we monetize, we lose a portion of the user base, so we have between 20%-40% loss of volumes. This is also why we need to wait a certain time to implement so that the liquidity between supply and demand remains sufficient. Out of the existing countries we're in today, we will have monetized the entire portfolio within three years, three to four years. We don't monetize a country instantly, so we do it over a few quarters, depending on the liquidity for regions or cities.
three to five years, bearing in mind that we're now about to monetize countries where the growth rate is about 200%-300%, so the 28 million will increase. More importantly, we will launch new countries starting next year that will be the countries up for monetization in five years. We haven't decided yet which countries. We have the usual suspect list, but we are working on it, but it's about always having about five years of growth ahead of you, for that matter.
Great. Many thanks. I have more questions. Please, anyone in the audience?
I'll go ahead. Moving over to you mentioned M&A being one potential route for inorganic growth. If you know, if you would zoom out a bit to talk about what role you think M&A plays in the industry at large and then more specifically about what it means for you at BlaBlaCar. As you said, you know, your cash balances, you're well lined up to do the M&A, but where do you see M&A adding value for BlaBlaCar and the industry?
The M&A are not geared toward a competitor of BlaBlaCar, so not a platform that is in multimodality, because we haven't found really one. The M&A is more adding up one supply, which is either bus or train. Train will more be into more developed Western European type of countries. Bus is more in kind of emerging countries. Where we would do M&A is to acquire an existing platform, let's say emerging country bus, a marketplace that has established itself only for buses in a specific country, gaining market shares and being ahead of, in terms of volumes, ahead of what we could build organically. It's really adding up. For us, it's saving three to four years in the development in a given country.
It's not gonna be on carpooling because we don't see any carpooling opportunities. That being said, if we find one, we will not prevent ourselves from doing so. What we're looking for is, if any, in the countries we're currently present or aiming at developing, if there's one platform for bus or for train, that's what we're gonna look at. It's not about consolidating the industry we're in because we don't see any means of consolidation in that industry because we feel with the uniqueness of our carpooling global platform, we don't see any competitor in that field.
Got it. Thanks.
Thanks. Any other question? Yeah.
Could you talk a little bit about deciding to?
Say again.
Could you talk a little bit about deciding to include train into your multimodal platform and what it would look like? You said that you're probably gonna do it next year in Western Europe, and I think it's easier to understand M&A of bus platforms than maybe of train platforms. Maybe at a high level, if you could talk about how train is gonna become part of your portfolio.
First of all, I agree on your comments for M&A on train. It's less logical. That being said, there are a few platforms that exist, so we don't want to prevent ourselves from looking at them, but I think it's gonna be mostly organic. Now, why do we implement train? If I take the example of France, which is the first country of BlaBlaCar in terms of unit economics, if you want to be multimodal in France, not having the train, you're missing a piece that is extremely important into your model. The unit economics are not as good as carpooling or bus. The thing is, given the roadmap that we have to become intermodal, being intermodal without the fast speed train in France is not possible, so we're adding it.
Given our business model and the way we're structured, a team of five people can implement the train into a platform. It's not at all a costly investment to implement. There will be a bit of marketing, acquisition marketing to make people know about the fact that we offer it. From the organic traffic that we already have, they will just go into the platform and see the train solution appearing. And it's mostly Western Europe. We don't foresee the train as a solution for multimodality in emerging countries because basically, most of the time the transportation system is car and buses, less so train.
Thank you. One from the broadcast here. If you could quantify the COVID normalized metrics, and I think more specifically that refers to you mentioned that Q1 is not profitable, but that the full year 2022 will be. Is there seasonality there, or is that just a natural progression of the business?
It's a mixture of everything. We do have some seasonality, and we're not enough in the southern hemisphere to compensate for the northern part of the world's seasonality, so July, August are much bigger months. Now, the comment I made about Q1 is, you know, Omicron was still there in January and February. You know, volumes were way lower at the beginning of the year. You know, the situation has evolved tremendously, so we kind of forgot about that. If you adjust for the low volume of January and February, that was the comment I was making. Now, we'll be profitable Q2, Q3 and Q4 combined, not with Q1. Close to.
Thank you, Nick, for the presentation. A question about regulation. My understanding, correct me if I'm wrong, is that carpooling is generally unregulated around the world. Is that true, or is that changing? You mentioned that France is going to subsidize carpooling, which sounds great, but is more government regulation and oversight good for BlaBlaCar or maybe not so good?
depends on the regulation. It is regulated from a tax point of view. In, I think, all of the countries we operate, a driver cannot make a profit. That's the way of regulating carpooling, which is the subsidies that you get from carpooling, you don't declare them in your tax form because they're not for profit, it's about cost sharing. That's about the only regulation that we're facing. It's to avoid the other regulations, because if you start making profits, then you're in the traditional for-profit transportation business model. Interestingly enough, in all the countries we operate, the car insurance, the private car insurance that the driver has does cover for carpooling trip.
You don't have to improve your insurance model to cover for the passengers because it's not for profit, again, it's really sharing a ride. Now, would we benefit from more regulations? You know, given that we already feel we have very high barriers to entry, we don't need more regulations. If we would have lower barrier to entries, it would be good for us because we are already the incumbent operator in most of the countries we operate in. Governments are not willing to fight against carpool. They are more willing to use carpool as a lever for solving some of their transportation issues. If I go to short distance, so the commuting, we are solving for regions, not cities, but we are solving a big issue by providing a commuting solution.
Actually, companies and local governments, they do subsidize those trips, so the passenger doesn't pay. That's also why the business model is efficient for us because since it's a recurring trip, if it was not subsidized, people would find their way without us after the first two or three trips. Now, it's thanks to that regulation, we are protected. If they start preventing carpool, then it would be an issue, but it's clearly not the path and the trend that we see in those countries, all of the countries we operate.
Okay. I think we have two more questions.
Okay.
Here you go.
Just to come back to the TAM, and it's a big market. If you could just sort of give a description of how big you think BlaBla could become in your target markets without any specific regards to timing. You don't have to say in five years or something, but that maturity, how big could this business become in your view?
It's a vast question because 22 countries is only the beginning. It's a replicable model that you can develop. Out of the existing user base that we have, we intend to grow 20%-25% CAGR for the next five years after slightly more than doubling, I think, this year. Now, in absolute terms, if I don't give timing, it's over, I mean, yeah, largely over EUR 1 billion revenues company and within the foreseeable future. Scale is, but is, you know, we don't see the limit. I don't know when we'll reach obviously per country, but we haven't reached even in our first country, which is France, we haven't reached the limit by far, as of today. Without giving more numbers, it's hard to precisely answer your question.
We expect to more than double the revenues before 25.
Thanks.
Organically.
Organically.
Super. I think we'll end with that question. Thank you very much, Nicolas. Great presentation. We move on in the schedule. Next up is Daniel Yu, who is, yeah, in the back. You can come up front. Daniel runs a company called Wasoko, which is our newest investment. You can use that one.
Okay. Hi, everyone. Pleasure to be here today. I'm Daniel Yu, founder and CEO of Wasoko. As Per mentioned, recently joined the VNV portfolio. My first time here, definitely an honor.
Sort of help him to, yeah. Down is help.
Starting off, what is Wasoko? We're an e-commerce company that supplies and restocks mom-and-pop stores across Africa. The core mission is how can we help these communities get more for less, help the single mother with $1 to buy rice get 500 grams instead of 400 grams to feed her family. You know, fundamentally, got a great team behind us, some of the best folks in e-commerce, especially across emerging markets, as well as a great crew of existing investors as well.
Most recently, a $100 million round closed earlier this year, led by Tiger and Avenir, with significant participation from VNV, as well as most of our existing investors. In terms of why Africa, what are we doing here? The underlying demographics and trends, some of you may be familiar with, are just completely unparalleled versus anywhere else in the world. There will be more Africans born in the next 10 years than in China, India, Brazil and Mexico combined. Average age of 19, you compare that, and actually, Sub-Saharan Africa is even lower at 17. Compare that to median age in India is 27, median age in China is 37. It's just completely off the charts.
Even when you just look at the specific urban trend, urbanization is actually happening at a much faster rate in Africa than anywhere else. You will have a larger urban population in Africa than any other region, you know, China, India, LATAM, you name it, by 2040. Really figuring out how do we supply goods and services to urban Africans is of critical importance to the global economy in the coming decades. Specifically when we look at our market, which is fast-moving consumer goods, the vast majority of these are sold through mom-and-pop stores, these little corner bodegas, kiosk shops.
Right now it's about $850 billion sold across the continent, of which $680 billion or so is in this informal mom-and-pop segment, and currently $270 billion is in the urban segment. Of course, that's gonna be growing very quickly with those trends I just outlined. Specifically, the challenge that these mom-and-pop, you know, kinda hole-in-the-wall places face is in the restocking. Right now, you have someone like Maria who runs this shop in Nairobi. When she sells out of rice or soap or toilet paper, she has to actually go physically herself to a wholesaler. Think about, like, a little kind of garage downtown where she has to buy the stock and bring it back herself.
There's no kinda Frito-Lay truck that rolls up every morning to restock the shelves for you. You have to go and get the goods yourself. This is a big challenge for the other, you know, 10 million or so of these shops, who have to physically source their own goods and who also don't have access to working capital, you know, financing or other kinda support services as well. What Wasoko does is basically serves as the e-commerce, the on-demand, the fulfillment platform to get Maria and shops like her that rice, soap, toilet paper when their shopkeepers need it. We source directly from the brands like Procter & Gamble, Unilever, Nestlé, you name it.
We run the actual physical infrastructure, so we lease warehouses as well as have our own in-house logistics network, so we are a first-party e-commerce platform, and then facilitate that free same-day delivery to the shop. When they order for that rice, soap, toilet paper, they're able to get it and restock same day without having any out of stock and delays. On the back of that, we've also expanded to doing merchant financing. This is specifically a pay later product whereby the shop is able to order today, get those goods delivered, but then pay for them later. This is a very short tenor facility.
This is actually just a seven-day pay later product, which makes sense given the kinda high turnover of products on the shelf of the actual shop. What we see is that when a shopkeeper gets access to this, their purchase value increases dramatically. It's about 2.5x right now. Really, we see this as just the first stepping stone in a layer of a number of different value-added services that we believe our shops and the merchant network can offer as powered by Wasoko. Right now, we have a footprint in 7 countries. Kenya, Tanzania, Rwanda, Uganda, Senegal, Côte d'Ivoire and Zambia.
In total, we expect this year to do roughly $270 million in revenue. That's as a first-party operation, that's the same as our top-line sales. This is up from last year. It was about $130 million. In 2020 it was about $30 million. We've had a very fast kinda growth trajectory over the past couple of years. Key thing I would note is that we're actually very well diversified across these countries, which I think is very key when you're dealing with an overall kind of volatile region like the African continent. You don't wanna have all your eggs in kind of one basket given, you know, the individual country risk.
The opportunity is also obviously massive and, you know, I think pretty much anywhere that we look across these 54 countries, there's multibillion-dollar markets to pursue, as we continue to expand. In terms of the underlying economics, you know, this is a B2B e-commerce model, so we are kinda dealing with wholesale margins here. That being said, we've made kinda tremendous progress towards having profitable economics. In fact, we expect to have a profitable contribution margins. This is kinda profit per order after all the delivery and sales costs, by the end of this year across our markets.
With that momentum, turn all of our country operations profitable by the end of next year. One of the other, I think, kind of standout areas of the business is same-store growth and GMV retention. As far as the unit economics are concerned, on the acquisition cost side, acquisition costs are extremely low. We have a field force that basically goes out door to door, signs up shops. Of course, these field reps in the markets where we operate, labor costs are very low. We're able to sign up a shop on average for $2-$3. The average order value per shop is something like $500 a month from us.
That has very good economics over time, and we actually see that shops increase their order value with us, the longer they stay with the platform. That's where we've seen these very positive kind of revenue retention numbers, as we continue to grow and engage the customer base. Merchant financing, as I mentioned, is really kind of a core part of helping to grow the business as well. Right now it drives about 10% of our total sales and volume. The repayment rate on this is pretty unparalleled for the kinda SME segment in the market. It's basically 98.5%-99%.
Given the huge volume increase that we see on this product, you know, definitely is a huge driver to growth. We do in fact charge fees on this, in fact about 1.5%. On a kind of standalone product basis, it's more or less break even. As a contributor to increasing that overall lifetime value of customers, definitely has a huge impact. We see it as part of the overall kinda ecosystem grower and driver.
Really, you know, for us, the long-term vision here is not just about, you know, how can we distribute and, you know, sell as many of these, you know, core products as possible, but how do we leverage this network of merchants, the 75,000, you know, active shops that we have right now across these seven countries, to really become the on-the-ground last-mile infrastructure, the kinda hyperlocal access points for whatever goods and services these communities need over time as they grow. Right now, you know, we've started by focusing on how do we optimize the supply chains for those core products.
Over time, for us, it really becomes about layering in these additional goods, and especially I would say digital goods as well, to better serve the communities, and use kind of our supply chain expertise as well. A big part of what we're focusing on now is starting on the upstream side. We're actually getting into private label. We have a whole line of products under a kinda in-house brand, Smart Pick, that we're about to launch. This is gonna be kind of like our Kirkland equivalent, products that we're contract manufacturing through a lot of the excess kind of factory capacity that is available locally in market but is underutilized.
Basically using that to drive better value SKUs in these core categories. What we're seeing is products that give us triple the margins of the branded goods. The reality is that the customer, the consumer segment that is ultimately buying these products is not particularly brand loyal. They have, you know, $3 a day of purchasing power, and so they're just looking for where they can get the best value. If we can get them toilet paper that, you know, gets the job done but at a, you know, $0.05 cheaper price, they'll go for it. I think we're very excited about how that's going to help drive the improved economics and the penetration of that over time.
The other big product area is going to be, as I said, on these kind of digital services, both for the merchants and then also the opportunity to use the merchant network, to expand into B2B2C services. On the merchant services side, you know, we're building on the financing product, looking at where we can potentially partner in with other financial entities, banks, insurance companies that want to sell into this segment and do that more on a marketplace basis where we can take a cut commission of those services, given the data and the relationships that we have with the shops. Also, looking at other tools that we can develop for the shops to better manage their operations.
This would be ledgers to manage either their inventory or their kind of lending that they're doing to consumers. On the B2B2C side, though, we definitely see a huge opportunity given that the average consumer lives in a place where they don't have a street address, they don't have you know even a kind of road name in most places. But pretty much everyone has one of these bodega shops down at their corner.
What that means is that if that shop is already a known delivery point to us, then being able to expand and extend, you know, a Fulfilled by Amazon service to any number of third-party sellers who potentially wanted to be able to access the kinda last mile African, you know, urban consumer is something that, you know, we would be uniquely placed to be able to offer. I think that, combined with the ability to then also turn that shopkeeper into an agent for digital services, is also a huge opportunity.
On that side, this is things more like mobile money agents, basically human ATM services where people can come and do cash and cash outs through different mobile or kinda digital banking or wallet services, given that the actual physical infrastructure, banks and ATMs, something only like one ATM for every 50,000 people or something right now. Oftentimes that could be miles away from where someone actually lives. These types of human agent services can be super valuable in terms of extending that footprint. Once again, it's a partnership opportunity to leverage this infrastructure and this merchant network that we built out.
Yeah, in terms of our current objectives, as mentioned, you know, we raised $100 million round earlier this year, so we're not in any type of kind of current cash flow crunch. We currently with that's a runway for us until January 2025. In a good position to, I think, focus on a lot of these product growth and improvements in underlying profitability. As mentioned, core objectives right now are, number one, getting to profitability in all those existing established countries. Number two, rolling out the private goods and really seeing the penetration we can get there.
Number three, building out this downstream ecosystem of services to really layer on to that merchant network, that we have. Number four, growing the overall volume to one billion plus. Thank you very much.
Thank you very much. We'll open up the floor for questions. I think Björn is ready to kick us off.
One question would be if you could just dig a little bit deeper on the SKU side and selection. For these small pop shops, do you fulfill like their entire restock need, or is it more niched around certain number of SKUs? And how is that, you know, going to develop from your sort of point of view?
Sure. Right now we focus on the dry goods, so the non-perishables, in the shops, which account for about 60% of their turnover generally. Of that, we estimate that our wallet share is about 2/3 of that segment. Something like, say, 40%-45% of the overall, kind of shop spend. We are looking at the other categories as well that kinda make up that remaining 40%, and those tend to be split between beverages, some of the fresh products, not necessarily produce, but more, things like bread or like these kind of local snacks that are supplied day to day. Milk actually on a like a 5-6 A.M. kind of delivery truck basis, which is outside of our current delivery windows.
There are a few of these other categories that we're definitely looking into just given some of the complexity around setting up those specific value chains. We're kinda still focused on the dry goods, but definitely over time, we wanna get as high a share of the wallet penetration as possible.
Yeah. Thanks. Another question on, you're in quite a few countries already, and would you say like is there a playbook that works for all these countries or how similar or different are these different markets across, yeah, mid-Africa?
Yeah. I think what we've seen is by and large, the market structure is the same across these markets, right? The actual reality and the challenges that the shopkeeper in Kenya faces is the same as the shop in Senegal, even though they're on opposite sides of the continent. Really what gets kind of fundamentally, the operating playbook for serving them in terms of the ordering, the delivery, the logistics operates the same way across these countries in different parts of the continent. The big difference is that the upstream supplier side can change in some cases, especially kinda going east to west, that's a different set of suppliers.
What we do see is that locally within the region, so for example, in East Africa, the four countries that we started with there, they do tend to be managed by the same central supplier team. You'll have the Unilever office out of Nairobi, Kenya, actually oversees Tanzania, Rwanda, Uganda as well. We've been able to kinda build some of these regional hub relationships that have allowed us to expand across some of those nearby countries.
Björn, I don't know if there's questions in the room we can put.
Thank you. Could you talk a little bit how you select markets? What is your best market right now and why? Any expansion plans for other markets, and also how do you factor in kind of country risk and general geopolitical risk in the return profile and your projections going forward?
Thank you. In terms of country selection, we have, I think, heavily indexed on this kind of regional grouping model, whereby when you have countries that are in some of these actual, like, economic unions between them, the East African Community where we started in Kenya also includes Tanzania, Rwanda, Uganda. They have a customs union between those four countries, which allows for the local movement duty-free of locally manufactured goods. You also have these kind of supplier structural benefits, where you have kind of one central office that will oversee multiple countries in the region. That's made it easy for us to expand across those different geographies. We see the same thing in the newest countries that we launched in Senegal and Côte d'Ivoire.
They're part of the UEMOA region, which actually has the same customs union. You have the same kind of centrally managed supplier teams for the most part. They even actually have the same currency, which is pegged to the euro, so it's a very kind of stable region that's easy to kinda do business across the participating countries. That's really helped kind of facilitate our expansion between them. As far as, you know, how we deal with the country risk in the region in general, I think what I'd say is how we've selected the countries has also kind of been backward-looking in terms of past 10 years, what has the economic performance, the stability of these places been? You know, do we see kind of consistent year-on-year growth?
All the countries that we're in right now, that's generally been the case. But, you know, you can never, you know, predict the future with certainty, especially in, you know, countries, like these in Africa. Our approach has been to also diversify and have this nice space where, you know, no one country is the majority of our business. You know, even Kenya, where we started, is about 35%. I think Tanzania is, like, 28%. Uganda, Rwanda, close to 20% each. It's a good kind of diversified mix, so even if something unexpected does happen, you know, that's not going to, you know, overall, be to the detriment of the business.
I think just given the overall tailwinds in, you know, African consumer growth in general, having this kind of strategy where we're kind of indexed across the markets is the right one that's gonna allow us to benefit from that over time.
Great. What is your best market and why right now?
Yeah, right now, interestingly, our best market, if you look at the kind of underlying customer behavior and economics, is actually Rwanda, which is curious 'cause it's not obviously one of the larger markets that pops up. I think there what we've seen is a combination of the highest kind of wallet penetration, so on the kind of per shop basis, we have the highest amounts. We also have slightly higher margins there on the gross margin side for goods, which I think has to do with a kind of less competitive supplier environment. There are fewer manufacturers there, so a lot of the products do get imported from outside, from maybe Kenya or Tanzania.
As a result, that's combined to give us the best economics. I think, especially when we look at now pushing our private label and stuff like that, we're actually planning to double down in that market to start because that's where we feel we can get the highest penetration of our own products to start as well.
Thank you.
Great. Thank you. A question from the broadcast: How do you manage your merchant financing risk? Have you seen any rise in bad debt, or roughly where are those metrics?
Yeah. I, you know, we've had the merchant financing product now for over two years. Actually we started it, in fact, just before COVID. You know, obviously that period was initially kind of quite interesting for us, in that we didn't know what was gonna happen with that portfolio. We elected to keep the service going, but to kind of stop the addition of new customers into the merchant financing. Actually what we saw was you know, complete stability in the performance. There was no kind of significant increase in bad debts, in non-repayments.
I think over time, we have built out, you know, quite a kind of robust relationships with our shops, which is basically we're their supplier of products. If they elect to not repay, this is not just, you know, some app on your phone that you can ignore. This is, you know, your actual supplier of goods and a relationship that people value.
I think the fact that we actually do have that physical presence where it's a, you know, Wasoko delivery driver or Wasoko, you know, contracted driver who shows up and actually delivers the goods, you know, they have that physical touch point that, "Hey, this is a real service, a real company that, you know, I don't want to upset the relationship with." I think that's why we've seen these kind of unparalleled, you know, kind of SME financing repayment rates, you know, with this kind of 90, 98.5, 99% in our markets so far.
Yeah. Thanks. Another question also from the live stream. Do you worry about any regional instability in the markets where you operate?
I would say certainly the markets that we're in, no. I mean, we have made some very intentional choices in the markets that we picked. I mean, I think you know, one question that comes up a lot is you know, "Why aren't you in Nigeria?" which you know, often gets a lot of headlines, a lot of press in terms of you know, being the largest country by population. I would say that's exactly why we're not in Nigeria, because I think there is a huge amount of instability there, basically any you know, economic, security, political, any sector you look at.
I think that's why it's really important to actually go kind of beneath the headlines, beneath the top-line numbers to really understand the dynamics, you know, on the ground. What has the historical trend been across all of these kind of key pillars of society, to ultimately, you know, de-risk against, you know, any big issues. That being said, as I said, you know, we don't have a crystal ball. You know, there could be any number of things that happen in any one of our markets at some point. I think given the diversification of the business, too, that's not something that, you know, really worries us day to day.
Yeah. A lot of questions on the board. Is there anything?
No, I think you're fine. Go ahead.
I'll go ahead. How easy is it to source talent, and where do you find talent for Wasoko?
Yeah. I think sourcing talent is something that we spend a lot of time on. I think what we found is a really good formula, especially for the more senior talent in the business, you know, there is a very robust diaspora population from the African continent. People who, you know, went to school, work abroad or are the children of these kinds of folks who do actually have, you know, a very strong desire to come back, you know, be part of Africa's future and contribute their skills and development.
I think we've got a great you know leadership of many of those folks. The other area that we found that's been quite effective on the talent development side is other emerging markets e-commerce tech founders or tech talent. If you look at a lot of our recent hires we brought in, we have a new head of logistics who actually came over from Lazada, moved from Singapore to Kenya. We have our new incoming CTO was VP of tech and product at Coupang in Korea and is originally from India and is now moving over to East Africa as well.
I think a lot of folks are seeing, you know, the you know Africa is effectively the final frontier when it comes to geographies that have yet to really be infected by tech. For folks that, you know, missed out on, you know, China, India, Southeast Asia, even LATAM, you know, I think the reality is it's the only market with 1.5 billion people that doesn't have a $100 billion e-commerce company in play already. I think that's the opportunity that we see and, you know, a lot of the talent that we talk to as well.
Good. Any more questions from the room here? No? Axel, no? Not now. If so, then thank you so much.
Thank you.
Super interesting. We have another, the next, Ali, you're next up. We're a little bit ahead of schedule, but I think, you know, there will be lots of questions for you, so I think we just plow on. Let's launch this. This is down, and somewhat counterintuitive, but that one. Down is up. That is the main point.
Thank you very much, Per. Thank you, everybody. Thanks for inviting us. Per said at the very beginning that we are the odd one out as we do not relate to mobility, and I thought of the mobility analogy as I thought of describing what it is that we do in Babylon. If you remember the old days, when I used to drive my car, I used to drive it until it broke down. I took it to a mechanic, they fixed it. I drove it again until it broke down. That's what you do with your healthcare. We wait until things go wrong and then we go to a doctor to fix it. This thing that we call really healthcare, it really isn't healthcare. It's sick care. It's reactive. It's episodic. It's physical.
One size fits everybody. We think that the true way to fix somebody to deal with this is to create a model of healthcare that is proactive, that continuously monitors people, that is there for them all the time, as we do with our cars, that we buried so many sensors in our cars that they never almost break down anymore. There is really no reason why we cannot do that with healthcare. To do that with healthcare, we need a fundamentally different infrastructure than what exists today. We need to start by collecting everybody's data. We need to analyze that data in real-time. We need to be able to identify from that data when is something going wrong and be able to intervene early and then intervene so 24/7 wherever people are virtually first, and then bring them down to do so physically.
In doing that, we need to make sure, because nobody can watch every human being's data all the time, we need to make sure that we have created enough AI agents who can watch that data in real-time. We do that with so many of our assets. We do it with the cars, we do it with every light in this building, but we do not do that with the most precious asset we have, the human body. We just wait for crises, for emergencies to happen in healthcare, and then we just throw a huge amount of money at it to fix it. What we are doing in Babylon, in a nutshell, is to build that infrastructure, to build the ecosystem that is necessary to deliver that service. With that, we start with what we call a personal health graph for every individual.
We take the data that you generate, whether it's from your watch or it's your hospital or your clinical data, and we collect it all in a single health graph. Everybody, including your doctors, have access to that in real-time. If I ask you now to show me all of your health data, any of you, I will be surprised if there is anyone in this room who has it immediately available. Any of you have got your health data immediately available? Not a single person. Remember, you are among the top 1%-2% richest people on the planet, living in some of the richest countries on the planet, and we don't have it. Something that's simple as that. Having that data alone is not enough.
What we then need to do is stream that data in real-time and create, as I said, agents, AI agents or non-AI agents, but agents who can watch that data. I did my PhD on interaction of waves and currents and how, on that matter is the differential equations. We're always looking at the differential equations in our data, so we need agents that can look at that data. That's what we're building. By the end of this year, we will have tens of these agents that can look at every variation in that data, and we need to be able to then find out who are the 20% who usually are responsible for 80% of the costs, and then find.
Identify those 20%, and then we monitor them continuously in order to be able to reward them if something goes wrong, but more importantly, alert them as the things are going bad and intervene early when necessary. When we intervene, we give people a 24/7 health assistants that are available to them all the time, that those health assistants, when necessary, you can talk to a doctor or a specialist in real-time on your mobile phone, and then when necessary, we'll send you to a local doctor who can see you physically. Only one in 10 times that will become necessary. As we do that, if you need to be hospitalized, we have the capability of sending you to a hospital and bringing you back and help you to recover.
We deliver your medications at home, and if you're seriously ill, we give you a care team that can look after you. By doing that, we can manage all the complex and care situations across what we do. That's in a nutshell what we do, and we try and do that in a most rational way possible. We take your data, we have the insights, we activate our people, we set goals for them, we then monitor them continuously with almost no human in the loop. All of that happens digitally with near zero cost of human beings involved. If you need to talk to a doctor, what we first try to get you a non-clinical person to deal with your problem, which is significantly cheaper than a clinician. We call this our pyramid of care.
If you need to talk to a clinician, we first do so virtually. As I said, nine out of 10 times, all your clinical records happen on your mobile phone. A wonderful, by the way, speaker before me, which I thought has a brilliant business, and he's a brilliant entrepreneur, mentioned Rwanda being one of his key countries. We could do that in Rwanda. We now provide about 5,000 consultations in Rwanda, as well as United States. That model is so scalable that you could do it in one of the poorest countries per capita in the world, as well as one of the richest countries in the world. When we need to send you to a physical place, we almost lost the battle, but we will send you to a physical place too.
We started that business in the United Kingdom, and I'll come to that, but just briefly on how we make money. We make money by either licensing our technology to somebody or delivering services for a fee or much more importantly, what we really like to do is to take the entire budget of the patient and take the savings because of the way we do. We believe that if we monitor you continuously and try and keep you at the peak of your health, we can avoid the expensive emergencies and crisis, and those are the places where all the costs are.
We did that for the National Health Service in Britain, where what we saw is that for our cohort of patients in a country as frugal as Britain, we can save up to 35% of the total cost of a patient when you look, compare our cohort versus the average cohort in the country that are the same as us, live in the same areas or same age, the same socioeconomic backgrounds as us. We took that model then to the United States, where we could hold the whole budget of the patient. When we entered the United States, we analyzed what exists here. What we saw is that the country has a lot of mom-and-pop shops in primary care, if you wish. These are single individual doctors.
You have businesses that have gone in, agilon health is a great example of it, is now almost a $10 billion valuation business, that have created almost a franchise model for these mom-and-pop shops where they join them. You have businesses, Oak Street Health is a great model of it, which have created shops, which kind of delivers the same model across the country. We saw that there is almost nobody who is doing the Amazon, who is basically doing a digital-first primary care model that can manage population health at scale. While many people, and currently, especially with today's world, love the model of shops and clinics and doctors going and visit them in the place, I have the benefit of age. Even though I look 75, I'm more like 55, so I've been around for a while.
I remember when back I was sitting on your chair when I was at Goldman Sachs, we used to love companies like Bed Bath & Beyond. We love these shops because we thought the idea was that if you have one shop, you can have it in every neighborhood until somebody came in and digitally cleaned that business and washed it away. We are absolutely convinced that whoever builds the infrastructure of the new model of healthcare will do exactly the same in the healthcare sector. We came to United States, which is now our main market, and what we saw that almost in January 2020 before the COVID broke out was the last time I could come to United States. I could come again in January 2022.
In the space of two years, less than two years, entirely remotely, without even being able to visit the country, we built over four million customers, like individuals that we serve. Much more importantly, where we take the entirety of the budget, we went from only 17,000 people in our first contract in October 2020 to now over 270,000 people whose entire budget we hold. We went from $29 million in revenue to $228 million in the United States alone in 2021. When you speak of growth, this is a tenfold growth. This year we'll do around $1 billion of revenue in the US. That's in two years, built in two years.
Throughout this incredible growth, we maintain 95% satisfaction and net promoter score of over 70%. For any of you who've built businesses, you know growing is easy. Holding a small group of people really happy is easy, but growing really fast and keeping your customers happy is super hard. Now I want to share numbers with you, but before doing that, we have just recently announced that we were super lucky to have David Humphreys as our new CFO. I want to introduce David to you. Not only is he significantly better looking and younger and more articulate, he's also been at PwC as a partner for about 20 years. He looked after companies like Facebook and Tesla, and he will be a good way of introducing him to you to take you through the numbers.
Great. Thanks, Ali. All right. Let's spend a few minutes here just on the numbers. Let me start with a little bit of an overview of what we reported out as a public company at Q2, and then talk a little bit about, you know, what's next for us, and particularly where from a financial standpoint, I think our core areas of strategic focus are. As Ali said, you know, our growth here has been spectacular, right? And, you know, we're looking on track for, you know, over $1 billion of revenue this year. When I think about what's next for us and what we've really been focusing on, it's really making sure that's the right growth for us as a business, and that we're really optimizing that growth from a profitability standpoint. What do I mean by that?
Well, one of the big areas of focus has been diversification of our revenue portfolio. As Ali mentioned, a lot of our focus has been on this area where we're taking the population health under our value-based care arrangements or Babylon 360 arrangements. Those come in different flavors, I'll call it. We really started in the Medicaid space in the U.S. That's been a great sort of starting place for us to really build our reputation, execute upon our business model. As we look out longer term, we're really keen to diversify our mix, particularly into what we would call the Medicare or commercial space in the U.S. That's where we see longer term as we look out a better fit for our business model and frankly, some more upside from a profitability standpoint going forward.
The next bit about how we optimize these populations we work with them is thinking about our level of engagement. As Ali said, you know, our product and being digital first is pivotal to our model. What we're really focused on is optimizing the engagement of those members we take the health risk on with our application, getting them on board with our digital first product, making sure that is the first step they're thinking about as they work through the healthcare journey. We've really become a lot better at that. How have we done that? You know, we've learned. We've been relatively new in this space. We've been learning quickly about how to, for example, get better data on our members ahead of entering into these arrangements, so we can really understand the membership we've taken on, really understand what the healthcare needs are gonna be.
To Ali's point earlier, think about really focusing in on those 20% of our members that have the biggest healthcare needs and are carrying the biggest healthcare costs. What does that enable us to do? Well, it really enables us to focus in on what we view as some of the key performance indicators, some of the early indicators of what's coming from a financial standpoint. Things such as patient admissions and lengths of stay that our members are staying in hospital visits are key areas of indication of how our business model is operating. Why is that? Well, those are a couple of the areas where the biggest healthcare costs come through.
The extent we can be proactive, get ahead of the need for our members to need to be admitted into hospital, manage them effectively if they do go in to reduce the number of stays in hospital, get them into aftercare programs as soon as we can. That really not only benefits the member in terms of the quality of healthcare they're getting, but also is pivotal to us executing on the margin growth story here that we're seeing across our portfolio.
Sorry, can I just intervene for one second? I
Sure.
Just to share some numbers here, because I think, David, super important for people to understand this. Just look at these numbers. What that shows you is that as we penetrate into our population and go and engage as little as only 25%-30% of them, what you will see is that inpatient numbers, inpatient admissions, that is the people who go into a hospital where all the costs are, fall from 120 to 80. That's a 40% reduction in hospitalization in our population. I mean, that is huge. For those of you who understand healthcare, and then more importantly, those who also go to a hospital, what you will see is the number of nights to stay in a hospital goes from four to three on average. That's a 25% reduction in that number, too.
If you equate the cost in a hospital is equal to per night, what you see is a massive reduction of 40% on one hand and 25% in the other hand. What you will see is that as a result of that, we could get to medical margins, that is savings from what insurance companies could do, of over 20% in our commercial deals and about 10%-15% in our Medicare deals. An insurance company has to spend 20 years adjusting how much they spend on these things, making to reducing these numbers. Within the first year, we could manage to bring the prices down by 10% or so. Sorry, David, I just wanted to emphasize the numbers.
Yeah, no, I think that's great. That's where, you know, frankly, we're just seeing such momentum as we get better at this over time and seeing the data coming through here, it has been huge for us as we continue to grow out, I say, the right revenue base. The other piece of the business model, though, is just thinking to Ali's point earlier around how scalable this is. We've seen the revenue growth. We've seen the significant increase in membership we're taking on, but we're also continuing to drive costs out of the business and really see that growth as positioning ourselves well for the next steps here towards profitability. Flashing up our Q2 numbers.
You know, I think we're very proud of the fact that, you know, we've been a public company now for, you know, coming up to 12 months, and we've been able to meet or exceed all of the sort of financial targets that we put out over that process. That includes revenue metrics, but also our adjusted EBITDA metric or profitability metric that we've been working towards with investors and with the analyst community there. How have we been able to do that? We've talked about the revenue growth. We talked about that switch in terms of the portfolio mix on that revenue. That's really helped us on the adjusted EBITDA piece, along with also that focus around the operating cost leverage.
Let me pick up on that a little bit further, 'cause since Q2, we've also announced a very targeted initiative here looking at the cost base. As we say, we view this as being a very scalable business and really wanted to look hard at what extra we thought we could get out of the cost base, not least as we really focused in our business model. We've really narrowed in on the core areas of focus. We talked about the switch into commercial Medicare in the U.S., big focus there. We've had a look at, you know, what our other activities in the business are. Was there anything that we don't view to be core going forward that is an area of cost saving opportunity?
We have some existing efficiencies we can really drive in terms of how we're contracting, how we're engaging ahead of our new value-based care contracts. A great example here is I talked about getting that better data in. We're also laser focused now on working with an actuarial team that we built up in-house. They give us the intel ahead of time to drive some contractual improvements, make sure we're able to execute on new contracts in a profitable and cash flow positive manner out the gate. We've looked at some of the acquisitions we've done. We've done four acquisitions in the last 18 months, two years or so, really thinking about the synergies we can get out of them. Where are the cost savings? Where can we bring the digital-first platform into those businesses to really execute strongly around the margins?
We've also just looked at our geographical footprint a little bit as well. Like many, thinking through the right balance, remote versus physical, driving some cost savings initiatives through some reduction in some of our physical locations. We still think getting people together in person is a good part of our business going forward, but there were some cost savings opportunities we've identified there. We're committed here to deliver around SEK 100 million a year cost savings going forward and feeling good about the trajectory we're on since announcing this in July of this year. This point around scaling is really key to our focus on profitability.
All these pieces we're doing around our margin mix, our focus on driving the right behaviors around our high-risk members, our focus on engaging them in a digital-first mindset when dealing with their healthcare, layering on some of the opportunities we see to optimize revenue streams relating to our digital platform just through licensing arrangements, through new commercial partnership deals. Delivering that along with this real focus we've got on our OPEX base here going forward, you know, we're feeling good about the path to profitability here, given the experience we've got and history of delivering this kind of growth scale in the business. Where does that leave us as we look ahead? Well, we've got great momentum in our value-based care business. Mentioned that a couple of times, but the growth is there, and more importantly, we feel it's the right growth.
We're really focused on that engagement of our members, making sure they're really engaging with our digital-first platform. We see that diversification in the value-based care business really coming through. That is important to us. When I think about the deal pipeline here going forward, it's very heavily weighted towards that commercial Medicare space where we feel there's a larger margin opportunity. Finally, related focus on the OPEX execution. We've announced that program. We're, you know, a long way down the path on executing it, typically around the people costs, and seeing those savings really come through. We'll see that certainly in our Q4 results. That will really set us up well in terms of exit rates into 2023 and continuing the excellent revenue growth that we've delivered so far. With that, we're looking forward to what's ahead.
Thank you.
Fantastic. Thank you so much, Ali and David. I think we have some questions from the floor. I know Adrian is keen to start us off, but maybe if you wanna.
Sure. Thank you. Trying to better understand the legal risks associated with value-based care, specifically for a digital operator versus a legacy operator. Is there anything you can comment on there?
We don't see a legal risk any different than any other groups, hospitals, businesses, legalists. Very interestingly, as a business, when we first wanted to come to United States, everybody scared us of the legal challenges in United States and litigation. David, am I right to say that in two years of operations in here, we're probably the only business I know of that has not been sued even once, right? Not a single legal case. The reason for that is really simple. When you go and see a doctor, what happens between you and that doctor is in that room, is your say versus her say. When you're on our platform, everything's recorded. The doctors know that, and you know that. Therefore, there is no room for things going wrong in a way.
If they do, they're recorded, so one can act on very quickly. It's a much better model of care because when you see a doctor, what they tell you is about their knowledge. With us, you will eventually what a doctor tells you is about the collective knowledge of humanity because the AI things is helping them to understand what is the best treatment and the best course of action for you every time.
Thank you. I have a few questions. One is relating to an earlier guidance that you have given about EBITDA losses on a monthly basis. Was it SEK 16 million on a monthly basis? Is that correct?
We're guiding towards a minimum of 18 as exit for December. Remember, not all of the savings coming in from the OPEX initiative that we announced will hit in December. There's a little bit of extra benefit we forecast coming through in 2023. We really view that as an exit rate with, you know, some upside going into 2023 as we look out.
Further improvement in, kind of, say. Can we go back also to the matrix that we had with the blended gross margin? This one.
Yeah.
Yeah, exactly. To interpret that, is that you have the revenue numbers on top, like SEK 1 billion, SEK 2 billion, SEK 3 billion?
That's right.
You have the gross margins on the side. It looks like you could be profitable then some time somewhere between SEK 3 billion and SEK 4 billion, or?
That's right. It's important I would point out, because we try to use the slides we used as part of Q2, that actually that operating cost line is prior to really factoring in all of the additional OPEX savings. When we look to sort of refresh that with our minds in Q4 with the full benefit of our cost savings outlook, you know, we expect that metric to look more favorable because, you know, we're really, as we said, really focused on those margin improvements and delivering those OPEX savings.
The OPEX level will come down basically?
Correct.
Yeah. Okay. I have also on the existing contracts that you have done and with the graph where you showed the margins on commercial Medicare and Medicaid, can you give an example? Is the contracts that you signed maybe this year, are they sort of of higher quality or better structure than the earlier contracts or?
It's a really interesting thing. When we grew the way we did, being very frank, a lot of your peers in this country ask our U.S. competitors, "How come these guys come from outside and can grow so fast?" Then they start to think because they take bad contracts, right? At the beginning, of course, we couldn't show it, but what we now showed is that there isn't almost a single contract we've taken that in its very first year almost has been loss-making. Almost every one of our contracts, give or take, on aggregate, are profitable on year one. When you compare that with the brick-and-mortar competitors we have in United States, it often takes them three years before they can show profitability on every contract.
One of the reasons we achieved that is because actually we've been incredibly diligent on the contracts we take together with our partners, because our message to our partners was: If this works, it's going to be a game changer for you because you could deploy population health digitally first across a very wide group of populations everywhere. You don't need to build clinics in every village, in every rural area. You could deliver this service widely, but we both have an interest in the early contracts to work. The fact that our customers are now going, starting from $15 million of contracts and are now giving us a run rate of $1 billion in contracts shows how successful these things are. None of our contracts, David, if I'm correct, with the exception of maybe one, is loss-making today, right?
I think the other thing I was gonna say is also we're really focused on the new contracts, to Ali's point, being incrementally better in year one than they were 12 months ago. The focus we've got in that contracting phase with our partners, the focus we've got around, you know, getting more rigorous data ahead of time to really make sure those new contracts we layer on in the portfolio are incrementally profitable out the gate as well, even more so than the sort of original ones we took on two years ago.
It sounds like you will be able to take on new contracts if they are profitable, and that rapidly you will be able to continue to take on new contracts and maintain a high growth, maybe not as high as historically, but still decently high for the next few years, or how we on that?
We can certainly do that. Look, if you look at a very key growth area for us, which is year four to eight, which was our last four years, and those are what you call in the digital sector the scale-up areas. At the beginning, you have a thing. At the scale-up period, we have a graph that we showed some time ago. Babylon's compounded growth was on par with a very small number of companies in the world, and they were Spotify, Amazon, Google. If you just look at those at the scale-up area. We kept that momentum. We can still keep that going. The reality is that you, the investment community, last year this time, all you wanted from us was growth. This year, you kind of changed, flipped, and now you want from us profitability.
We'll be a fool not to listen to this. Now there is no rewards for growth as such. We will focus on profitability of the business. For me as a builder, as an operator, because at the end that's what I am about, for us, this is about building the infrastructure. Once you build the infrastructure and the factory, how many cars you put through it, how many contracts you put through it, really makes very little difference in operation. It's massively scalable. We've shown that scalability.
Thank you.
We have a question at the back.
Hello. Okay. You had a big increase in share of Medicare revenue the last few quarters. What do you think that mix is going to be going forward, both in the near, mid, and long-term? How does that impact both your operations and your financials?
For those who are online, unfortunately your thing has stopped working, but your question was an excellent question. That was that the mix of Medicare has increased significantly in the last couple of quarters, and do you see that going on? We absolutely do. In the United States, in particular, Medicare is among the more profitable part of the revenue mix, partly because the government is more generous in what it pays, the needs of the users are more, and you have many operators in this country who only focus on Medicare. We believe that every part of humanity needs to be served. We don't think that if you're poor, you should not be served, and therefore we started with Medicaid.
We showed that an area that others didn't wanna touch, we could do very well in. We will actually. We have to also be sustainable, so we will focus increasingly on Medicare, as you quite rightly suggest. The most important thing for us today is that when we first came here, people told us no company has ever come from outside United States and has built a healthcare services business in United States. We proved that can be done. Now, nobody's questioning our ability to scale. The question now is can we make this profitable? Our focus is going to be much more on making sure that happens. Because when you have contracts that are profitable, cash flow profitable, more importantly, then you could basically turn the tap on and scale as fast as you want, really without any question.
There isn't an insurance company you will go to today or a payer that you could say that you have two choices. You could wait until your members get sick and just pay their bills, or we can come in and manage them upfront proactively and reduce those bills and take your net promoter score often from being negative to what it is now with Babylon. That sales is not a hard sale. We need to generate cash as we grow.
Thank you. Any other questions? There's a question from the broadcast.
Thank you. One from the broadcast. In your view, what do you think could be a catalyst that could help the stock or more specifically, I guess, for the market to realize value? How can you make that happen?
I'm the last person to ask because if I knew anything about the markets, the very last thing I would have done was to bring it public at the time that I did, we did. It is what it is. I, you know, somebody asked these questions recently to Jeff Bezos that how did he feel when his market cap fell 96% from $110 to $6 in 2001. What he said was that was the performance of the company and the performance of his stock is not the same. The job of the management is to look at the performance of the company. What he was looking at is that his metrics are improving year on year, quarter by quarter by staggering amounts.
Eventually, the markets will come and see it. It cannot be that the markets were right a year ago when we were valued at $4 billion, and it's right today that we are valued at $200 million, whatever it is. At some stage, one of these two numbers or both of these two numbers need to be wrong. I think it was Benjamin Graham who said that the market has its habits, but the job of investors is to sell to the optimists and buy from the pessimists. It's up to you to judge when pessimism has taken over, right? Our job is to make sure this company keeps doing it. Even in these markets, on almost every metric, multiples of revenue, this, that, the other, we're at significant discount. Our job is to make sure that happens.
It is also true that our company is not fully financed, and people will look at that, of course, in a world in which you're not fully financed. I think the market is just that sometimes I wonder whether they can't see. There's some very basic metrics on this. I'll give you an example. We have one asset publicly known, an IPA, which is a collection of our doctors. Those assets trade at 15-10x EBITDA. That asset of ours alone will do anything between $20 million-$30 million of EBITDA next year. That asset alone should be worth a significant amount more than our own market cap. That's a small part of our.
On that note, we say thank you so much, Ali and David, for a great presentation. Which brings us to our last thing up here before lunch and one-on-ones, which is gonna be led by Keith and a few of our previous speakers. I'll just carry the furniture and hand over to Keith.
I think there's seats for everyone but you.
It's okay. I like it here.
Good morning, everybody. Just introduce myself briefly. Keith Richman, I'm a board member here at VNV Global. We thought it would be interesting, given a lot of the themes, to gather a few of the portfolio companies as well as a special guest, to talk about some, things that are near and dear to our heart. Originally, the panel was gonna be heavily focused on mobility and the notion of getting goods and, people, around. You know, as we began to talk, the, number of other themes emerged, which I think are absolutely interesting, and at least from my perspective, were probably more interesting in a lot of ways than even, what we initially started with. We're gonna take it a little sideways.
Before anything else, though, I thought maybe everybody could just introduce themselves. I think you've heard from three of them, so maybe they'll keep it real brief, and I'll start with Aspa to give a sense of who she is.
Hello, everyone. Thank you, Keith. Very nice to speak. Thanks for being here, inviting me here, and I'm founder of JOKR. I run operations. JOKR is a quick commerce company now operating in Latin America. We've launched in March 2021, and we are currently operating about 200 stores. Used to have presence in the U.S. and Europe, but decided to focus on Latin America for multiple reasons I think we'll discuss going forward, and that's it for me.
If I just give one minute for people who came late.
Everyone, you heard from me earlier, Daniel, Founder and CEO of Wasoko, doing the B2B e-commerce, restocking mom-and-pop stores across Africa.
Hi, everyone. Fredrik here, CEO of Voi. We're doing micromobility, so e-scooters, e-bikes, in Europe.
Hi, I'm Nicolas, CEO of BlaBlaCar, and we're doing multimodality, starting with carpool in three continents and 22 countries.
I think one of the things that struck me as we started talking to people, sorry, I'm gonna stay in front of the podium here, is that we are very geographically represented here, and there's been a lot of movement in and around people's businesses and models since they started. I thought maybe, Aspa, I would just start with you 'cause you've gotten the least screen time today. But it would just be great to talk about you started out by saying you're focused on Latin America. Why are you focused on Latin America, and what was the journey that got you there?
Yes. In March 2021, when we started, we launched across Europe, U.S., and Latin America. We did run an extensive analysis on where are the interesting models and what is the biggest TAM opportunity and alongside competition. As we started operating the business, we realized four different elements that made Latin America the most attractive market for us to operate. Number one is Latin America, and you've heard it also from Daniel, has a very, very fragmented retail proposition. There is not a big retail player that captures the market. The supply chain also is very inefficient. There was a huge opportunity to build an infrastructure there and also capture market share by establishing a quick commerce retail player. That was number one. Second part was the labor arbitrage.
In Latin America, the basket size in comparison to the hourly rate and the labor cost is significantly better than any other market. We anyways chose markets where that ratio made sense, but in Latin America was three to four times better. It's not only on the delivery cost, it also goes back to the supply chain. When you come to fresh, for example, lots of the fresh fruits and products that is very big part of our assortment and what we sell, they are being produced and delivered by local people, and that also creates opportunity for higher product margins. Third one is the population, and Daniel mentioned it also for Africa, but we see an increasingly young population that starts getting into the online, and there is a very, very low online penetration. The fourth one was a lower competition.
All this together made Latin America a very, very attractive market on our end. It's not that we didn't know it from the beginning. We knew that Latin America would be our key market, but we did see a lot of demand and a lot of opportunity and economics that made sense across all other markets, Europe and the U.S., that we were here. With the macro environment shifting, then we decided to rather focus in the markets where there is both demand and opportunity to have high margins very, very quickly.
Fred, just to contrast that, 'cause I think scooters, you know, even though those market characteristics exist, scooters seem to have failed pretty miserably in Latin America. Given all that young population, technology, cheap labor, what happened there? Like, why does one work and the other just bombs?
No, great. A great question, and I think it goes back to a few things. One, what's been important for us and why we have got so heavy in Europe is infrastructure. Infrastructure for micromobility is more around bike lanes and, you know, protected bike lanes and safe ways to ride your bike, your scooter and so on, where Europe is clearly more advanced than Latin America so far. I think the other big thing in our industry is that when we put out supply in Europe or Latam, the supply, the CapEx, the cost for a vehicle is the same in Latam as in Berlin, as in Stockholm, as in Oslo.
While the willingness to pay in Oslo, Berlin, or Stockholm is significantly higher than in some of the Latam markets. That's something we saw, because early on, we had some peers who went to Latam as well, but they didn't really figure out the product market fit and how to scale the model in a financially sustainable way.
Hugo, you guys are operating in both, right? You're in, significantly in Latin America as well as in Europe.
Yes, we are.
You've made it work in both.
We also failed some countries, and we shut it down. It was a product market fit issue and a timing issue. Like, you intend to grow faster than what the real pace of growth can be in a given country. You invest more thinking that you can increase that growth rate, but you cannot. Then you start building an economic model that doesn't fly.
Yeah.
You have to get out, wait a few years, and then replant the seed, accepting what I was commenting, three to five years lead time between the moment you enter the country, the moment you can grow it up. Basically, 'cause we're an old startup, we made that mistake in the past, and that's why now we're not gonna fail. Comparing the models, the product market fit works very well in Brazil and Mexico, less so in Argentina, for example. We're looking at it, but it's also a question of geographical for BlaBlaCar. Geographical footprint, the way the transportation model is structured, and the way your product market fits. Yes, it works on both continents for BlaBlaCar.
Got it. Daniel, you talked a lot about this when you spoke about why Africa specifically, but are there other areas in the world where those characteristics similarly exist that you've looked at, or just let that be somebody else's startup?
We've definitely looked at, you know, pretty much all emerging markets, geographies in terms of the dynamics of our kind of B2B retail business. I think Sub-Saharan Africa is particularly attractive in this space because what you find is that the upstream distributors in more middle-income countries, so if you look at in India or Indonesia or Latam, those distributors actually tend to be quite powerful. They have presence going back. You know, Unilever has been present in India for over 100 years. The distributors, these very large established family businesses who do hundreds of millions of turnover for just Unilever across some of these regions, they're very, very powerful. If you're trying to come in and disintermediate them in those markets, you tend to face a lot of opposition.
I think this is what companies like Udaan who pursues this model in India have faced and have found very challenging. Sub-Saharan Africa, the kind of middle mile players, the distributors and these wholesalers are actually very fragmented, very weak. Even for us getting started, you know, I'm a software developer by background, grew up in California. I you know, went out to Kenya in 2015, show up there with, you know, kind of my app and SMS system, and Wrigley, the chewing gum company, was like, ready to give me a neighborhood to start distributing in, like, on the spot. It just kinda shows how like, poorly built out a lot of the distribution was at the time and still is.
I think that has really helped us in terms of being able to get, you know, greater kind of volume and kind of negotiating power over time, whereas I think that would've been more difficult to do in, you know, some of these more middle-income geographies.
I guess just before one follow-up question for you, and then I wanna hear others. With the infrastructure, Fredrik, you mentioned that in Europe versus LatAm. Is the lack of infrastructure often in Africa a benefit to you because you're able to provide it and build it, or is it something that has proved to be a stumbling block, or is it just a non-factor?
I mean, absolutely, if you look at, for the overall economy, is the fact that, you know, there are not as many good roads and bridges and something like that.
Mm-hmm.
Is that a good or bad thing? Obviously, that's a bad thing.
Right.
I think that in the face of, and with the reality that you don't have the street names, you don't have the mapped out stores and, you know, Google Maps doesn't really work. The fact that we have internally built out, you know, our own database and set with all the latitudes and longitudes of where our shops are and how to get around and, you know, our routing systems to serve them is a huge competitive advantage, right?
Right.
I think to the point of, you know, the long-term capabilities of being able to do a, you know, fulfilled by Wasoko type of service, you know, that's a unique capability that no one can come in and do because there isn't a UPS, there isn't a FedEx that you can just plug into to, you know, start delivering for your e-commerce company otherwise.
Got it. Aspa, has that been largely for you? I mean, you had mentioned that you're building out a number of pieces of the value chain. Is that by necessity or is that by opportunity?
Primarily by opportunity. In Latin America, it's not similar to Africa.
Mm-hmm.
Things have been. They are a lot more developed. However, they are more fragmented, and that creates for us a lot of opportunities to fully vertically integrate every part of the value chain. We've connected with farmers. That is one example to procure directly or fresh because that's an opportunity to increase our margins significantly. We are building distribution centers that can also we leverage going forward to also supply bodegas and smaller stores as an adjacent business model and growth opportunity to our model. The infrastructure exists, but in a very, like, premature way, and that creates for us an opportunity to leverage and build on this and create now an ecosystem when it comes to retail that consists of both physical infrastructure but also technology. I think the two of them do not exist, and that's our opportunity.
Got it. Then, Nick and Fredrik, separate question. You know, go back to the two of you in a second. You both operate in a lot of different countries, so obviously the dynamics are different. What role, if any, does the government play? I mean, Fredrik, you mentioned a bit, but Nick, does the government play in how you operate, where you operate, and are they sort of friend or foe?
We're lightly regulated, so they don't play a heavy role. You know, we're in India, for example, and in India, you know, the government is trying to regulate. Therefore, for us, the question is not to be assimilated with the Uber-like and be more on the Kalpam side 'cause otherwise the regulation will make it not sustainable for the economic model. We need to be in very close, you know, contact with them. In the vast majority of countries we operate, it's more on the upside side because they can help us develop, and we're a solution. You know, most of the countries we operate, it's light regulation and governments that are willing to help, so it's fairly easy.
You think you said something when we spoke earlier about how the drivers can't make too much money or else they're, they'll be taxed. Is that something that is a regulation, or is that, you know, is that country by country, or how does that sit?
It's country by country.
Yeah.
It's a per kilometer system that we just plug into the platform so that the price cannot go above a certain threshold, so that, even though for one single trip it will be under the radar, we just want to avoid having people trying to build an economical model that will then be used an example of our platform not respecting the rules. But yes, it's per country. Not all the country, but most of them.
Yeah. Fredrik? Clearly, it matters to the cities.
Yeah. Clearly, it matters.
Yeah.
No, as we see, we have our two most important stakeholders, one, the customers that I've talked about, and two, the cities. Since we're using public space in cities and urban areas all over the world, regulators will have an impact on the business. That's also what we said from day one, that let's try to build amazing products that work closely with cities, with politicians to shape the landscape and shape the environment for micromobility.
Got it. Switching gears just a bit. I think collectively, I'm gonna round up, I think people on the panel have raised $1.5 billion, maybe. I'm not sure if it's, I'm right or wrong, but I would probably take the over, if I was betting. You know, when you think about it, and now obviously we're entering a different time of the world, has the access to capital for the segment you're in been a problem for the industry? Has it been a benefit for the industry? For the particular company that you're at, has it been something that has helped or hurt you specifically? I'll let anyone take that who's got an opinion.
Happy to start.
Yeah.
The most hated industry probably nowadays.
I mean, how much money, just for context, went into the quick commerce?
Billions, I think, in the last years. I don't remember the exact number. We've raised SEK 430 million in the course of 12 months, and it is an industry that does require capital to scale. It's a lot of infrastructure. You have to have a certain volume to be relevant. You need a certain volume to access the CPGs, so it is money to put in. But then also this investment does create a very big barrier to entry in a huge industry and a big opportunity to continue scaling and continue having a lot of benefits. The environment, the change in the economic environment has not like, has made us to take the decision to exit the U.S. and rather focus in Latin America, though we could have just run both countries at the same time.
as an opportunity has created also other opportunities, the fact that we have been well-funded, that also gave us a big advantage compared to other players. We did have the expertise. We were quick enough to put the infrastructure quickly, and now we have enough capital to continue scaling while all of the rest of the competitors have rationalized, so we can continue growing the market. It's also for us an opportunity to start thinking on how we can make the model faster and more profitable. I do find there's an opportunity. I think it would be great for more money to come in as it is a huge space. It's really not technologically advanced.
There are very, very few players, I think, who have capital to actually do this right and build whatever is needed for the future to scale, be it on technology, be it on the supply chain infrastructure, be it on the management of the blue-collar workers. Yes, I'm personally very excited, and I think it has created certain difficulties, the environment, but also opportunities to be a lot more rational into how to grow the business more efficiently.
Just one follow-up, because one of the most interesting things that you started with was that you've kind of given up on New York. Has that largely happened in the industry where there's now players that are focused in specific geographies building the business, or are there still people or entities that are trying to sort of take over the world?
I would say there are a few players who are still remain like global and across multiple regions. We did find that focusing on a specific region that has a lot of similar characteristics, starting with the language. Only Brazil is not speaking Spanish. There's a lot of cultural elements. We can leverage a lot of supplier relationships and opportunities around there. The same teams, I think it just creates an opportunity for us to be more profitable and much faster. It's more of a strategic, I would say, direction we've chosen, versus the other players who may prefer to be present across multiple cities but not heavily penetrating and creating the market share and leadership in these areas.
Got it. Nicolas, you know, I know you're relatively new. BlaBlaCar was really early, but in the interim, there's been a zillion dollars thrown into some form of ride-sharing, busing, you know, you name it. I mean, how has that impacted where you are today?
Well, it's BlaBlaCar had its own cash issues, but not in the same context as today. That marked the whole company a few years ago. Now the anticipation of cash is way more in the mentalities of the whole organization. By the way, the CEO could be CFO as well. It's all about anticipating. Like, as Aspa said, you know, cash is king, and having more cash is better. When you have too much cash, you tend to think that you can do everything, and then you lose efficiency. Sometimes being a bit constrained and focusing on what's my core product, what's my core market, what's the real thing that I need to succeed, and not trying to have too many bets on the table at the same time brings value as well.
It's a challenge, but it's also opportunities. You know, just to give an example, BlaBlaCar, pandemic, lockdown, it's 100% of your business that disappears. It's like zero revenue whatsoever, and your costs that don't change. That also helps the company to grow, basically. You're growing very fast in those moments, and when you're out of that system, you look at the world differently, basically.
Yeah. Fredrik, I know similarly, scooters are a well-funded industry.
Yeah, definitely. I can just second what Aspa said as well. I think especially early on in our industry, we had two American peers who were very, very well-funded, Lime and Bird, yeah. Who had raised hundreds of millions of dollars when we raised $10 million in our Series A. Everyone said they will just, they will crush you, they would buy you won't have a chance, and so on. What you said there, that, like, access to capital doesn't equal discipline with capital. Quite often, the other way around, our industry has been a good example of where we see that both Lime and Bird have kind of fallen behind on quite a few points.
We and our European peer that were much more capital-constrained, that focus on the core, focus on efficiency, focus on discipline, have taken over and showing better operational metrics and just better performance overall four or five years into this industry.
I mean, I don't follow the venture capital world in Africa nearly as much, but is it well-funded or is there a lot of capital going there now?
What I would say is it's been a dramatic growth over the past couple years. If you look at, you know, 2016, I think the total was $500 million that went into venture investing in Africa that year. Last year was over $5 billion.
Wow.
You know, it was order of magnitude improvement, I think still relative to the addressable market, though, still, you know, nowhere close to what it should be. If you think about actually both the population, 1.6 billion, and the GDP, $3.2 trillion, is actually the same of Africa and India. Yet India has over $50 billion. There's still order of magnitude kind of difference in the funding going in, which would suggest that there are good value opportunities, you know, even in an overall downward cycle in the market. I think just like, you know, right, reflect on us, a hundred million dollars, I think that's the largest that a non-fintech company has raised in Africa.
Still, like, given the adjusted market, there could be a dozen Wasoko's, and that would not impact our performance, I believe at all, because it's just very, very large existing segment too. We're not, like, trying to create a new segment of customer behavior. It's like shops have been buying rice, soap, toilet paper for decades, and we're just giving them an easier, cheaper, faster way to do that. We're not making up some new category, some new, you know, way of doing things, which I think is like a lot of the earlier, let's say like the prior generation of companies, you know, probably Jumia is the one that folks would be most familiar with.
You know, I think just totally missed the mark by coming in with this kind of outside copy paste Amazon model where like, oh, you know, B2C, like we can do this and just make it work in Africa. If you just once again kinda go, you know, a little bit down, you know, beyond the top line demographics and you realize that like less than 10% of the population has more than $10 a day in purchasing power, it's very obvious that they're not gonna use a traditional, you know, e-commerce experience to like buy random goods, you know, online on a regular basis. Vast majority of consumption, you know, is happening on these day-to-day consumable products. They're buying them from the local corner shop because they don't have cars to go drive to the mall to buy a week's worth of goods.
If you look at that segment though, there's that very, you know, all that fragmentation, all these middlemen, and you can aggregate that purchasing power and serve it, you know, with a B2B model and still bring that, you know, vast, purchasing power, you know, together and, you know, use technology to drive value and growth.
As long as you're holding the mic still, the notion of last mile, I think people throw that word around a lot, but one of the interesting things that you had mentioned was you're not actually. You're like mostly last mile 'cause they walk down the block to you. Is last mile actually important in what you're building?
Yeah.
The whole world is focused on getting it right to someone's hands, and you know.
Totally, yeah. I think there's-
It's counterintuitive.
Exactly, yeah. There's this distinction between kinda last mile versus like, I guess last 100 meters, right? Like, I don't think the last 100 meters is important because, as I said, you know, you have a consumer who has like on average, like $3-$5 a day. They're gonna be going and buying a couple dollars worth of goods, like coming up with some, you know, e-commerce proposition where you're trying to deliver it to their like, you know, home, you know, shack or something. It's like not that. It's not adding value to them. In fact, it's like probably making it more difficult 'cause they're gonna have to spend a ton of time on a phone, like, trying to direct some motorcycle driver to deliver their like, you know, two bars of soap or something. It doesn't make sense.
They already have a shop that they go to, they have a relationship with, that's like right down the corner. You know, that shop is aggregating for, you know, say 50 families in the neighborhood. You know, collectively is selling, you know, yeah, $50-$100 worth of goods a day. You can serve them, and by doing so, you know, reach on a B2B2C basis, the entire community population. I think that's totally sufficient.
Because of the shopkeeper's relationship and the kind of personal knowledge that they have of these individuals, using them and giving them services on the digital side, as I said, potentially becoming like a human ATM to enable the cash-in and cash-out for different mobile money services that do exist, or being an on-selling agent for any number of financial, or as I said, even the physical goods too when it comes to doing a click and collect type of model. I think it's definitely the way that services are gonna develop across Africa, generally speaking.
By contrast, if you look at the quick commerce space, I mean, is the need to get something so immediate a byproduct of the way that Amazon has trained us to sort of want something to show up even before we've ordered it? Or like, why is it, why is the rest of the world so focused, and why has so much money gone into, "I need it within the next 15 minutes or my head might explode"?
My view into this is that it's not the 15-minute service that is the value here that you offer, but it's rather the infrastructure that actually has access to every consumer, especially the ones in the most affluent, the B minus plus, that you do have access to them in 15 minutes. Whether you decide to execute in this or you decide to wait a bit longer, deliver the next day, deliver in two hours, that is something on the business model, on the project that we are delivering. It's more about building an infrastructure and a capability that allows you to do that. Once you have this ready, I think this is a challenge to build. You can decide for which products, at what price, and in which areas you want to materialize it, execute on this or not.
It's not a requirement, but it's an opportunity to be positioned within 15 minutes of every customer in the key Latin America cities for us.
You know, I know you were in the food delivery space, and one of the interesting things that's happened, it seems, is a lot of those costs, you know, which nobody ever charged to get things faster or to go the last distance, are now starting to get passed along to consumers. Do you see that happening in the quick commerce space already, where the subsidization is already going away?
Quick commerce actually, and being vertically integrated, gives you the opportunity to not pass this cost to the consumer and purely offer it as a service. If you think of a high-level basket for us in Latin America is about $20. There is an opportunity to make about 15% of extra margin with media revenue, which is a big outlet. Lots of CPG companies are paying a lot of this money, plus a 5%, let's say, delivery fee. I make easy percentages, but they are very close to reality. That's already 120% of revenue you're starting with. Minus 60% on the COGS, which is a very average, I would say, opportunity for the COGS, exclusive and like fresh that we do fully vertically integrate. That is already 60% profit margin.
Because of the labor cost, our fulfillment cost when it comes to picking and delivery is about 15%. That is already a 45% product margin, like contribution margin. If you remove something when it comes to fraud, contact center, payment costs, other extraordinary expenses, maybe that's another 15%, but it does go down to a 30%-35% product margin. You can only pass the consumer 5% delivery fee if you want to or monetize it as a marketing tool, but there is no such need. There is enough opportunity from the basket, from the product margin by vertically integrating and leveraging the efficiencies there to make enough profit for the business to work.
Got it. Nico and Fredrik, obviously, last mile means something very different in your business. I mean, I'm curious, Nico, you know, how important is it for you to find a pathway for the consumer to get the whole journey when they work with a BlaBlaCar?
It's actually a very, very good question. We don't suffer from having street maps and addresses and everything, you know, works as well, quite well for BlaBlaCar. At the end of the day, since it's a C2C, they find a way to define a meeting point. Now, usually those meeting points are not in the center of the city. They are where the driver is living from the city. We then visit micromobility partnerships, but it's too complex, and given the unit economics, it didn't fly. What we're implementing next year is the capacity, working through the tax issue of not making profits, to ask for the driver to do a detour to pick up. Therefore, we premiumize the carpool trip for the people using the service as a passenger because you can have.
Therefore you're willing to pay much higher unit economics. But for the moment, it's true that buses is a bus station, train will be a train station. Carpool is more on the like close suburb of the city, but not in the center. We think there's a huge market opportunity for us to do the extra mile at an extra premium price.
Got it. Ultimately, does that put you in competition with rideshare companies to some degree, or not really yet?
No, because the unit economics we're talking about are still a few euros as opposed to.
Got it.
You know, Uber, where it's 10, 20, 30. We're never in that range for even that extra mile. They can't compete. We've had some people trying to use our platform at the very beginning and try to, you know, highly rotate, and it didn't fly. I mean, we spot them first, but on top of it didn't fly.
Got it. Then Fredrik, obviously, Voi is ultimately the last mile. I mean, you get something from somewhere. When you think about that, then you think about everybody in the world around. He mentioned that you tried a partnership, it didn't work. Like, is Voi ultimately an enabler of the last mile for everybody who's in the space because you have devices, you have knowledge, you understand the laws and the geographies of everything, or you know, does it ultimately become a competitor, or where does that all sit given that skill set?
Yeah, no. We have a very good understanding of how people move around last mile and first mile as well in cities, of course, in all the markets we're operating in. What we increasingly are seeing as well is that we are becoming some kind of glue between other forms of transportation in the city. I think, yeah, take a city like Stockholm, 40%-50% of the trips are going to or from a public transport station. We're definitely increasingly becoming that kind of glue and the interconnector between public transportation, ride-hailing, trains, buses, BlaBlaCar and other forms of transportation in cities.
Got it. So sort of 50,000-foot question, you know, as I personally reflect on the last sort of two years, you know, three years ago, everyone was excited about flying cars and the world's gonna change, and we're all looking at these 20-year time horizons. The last three months, everyone's only looking about five days out, 90 days out, and, like, the whole world's gonna change if we don't solve this. Like, so if we just take a step back and realize that there is a lot of secular change going on in the world and, you know, we're in inning one of something or maybe inning three of something. I don't know.
Like, when sort of you look at your view as to what, sort of I'll start with Daniel, like what the world looks like in Africa in five years or seven years or 10 years for the distribution of products to the consumer, like, what does that look like?
I think it's fundamentally defined by having these hyper-local points of access, where within your community, within a few hundred meters, you can buy whatever you need, both from physical goods perspective and the digital goods, and that's enabled by a human contact, the human agent, whose technology enabled to get you, fulfill you, whatever those products and services might be.
You don't think in sort of as the economy there improves and the GDP improves that somebody's gonna say, "I don't wanna walk that 100 meters. I want someone to get it to me." It's just not the way it's gonna happen down there?
No, it's not the way it's gonna happen. I think the flip side also isn't gonna happen, which is like you're not suddenly gonna have a economic landscape where you know we build a bunch of supermarkets and malls, and people have cars to go like do their shopping for the week, right? I think you know the trend I think the leapfrog effect here is very real in the sense of like having the hyper-local access point.
You know, the you know, kinda Amazon Locker style infrastructure where you can just go pick up whatever you need nearby on your street corner when you need it, combined with the kinda leapfrog of, hey, labor is very cheap. So it's easier to have a kind of human ATM than to have, like, a physical machine ATM installed across all of these places, is what's gonna ultimately enable, you know, service delivery and distribution in Africa.
Barbara, I mean, just in the quick commerce world, you know, many of us remember Kozmo, like, you know, in San Francisco in the late 1990s. It's gone through so many iterations. What does it look like in five years? Like, what should we expect to get at our houses, instantly, and what sort of premium are we gonna have to pay for that?
In our view, our vision is to build an end-to-end, vertically integrated retail platform, and it starts in innovating and disrupting different stakeholders' experience. Number one is the consumer. Already today, there is a lot of personalization when it comes to different websites, but we are looking into the personalization, as we call it, 2.0, which is about hour of the day and day of the week. The app and the data we collect on what consumers are buying, and B2B, our quick commerce company, helps us actually collect a lot more relevant information about the order somebody's placing. We know about our user, what to show them, and what type of content to show them on a Monday morning versus a Friday afternoon. It's not just about curated to the specific user.
It's curated for the user and for that specific time they are using the application. The second layer where we want to very, very differently operate is the whole supply chain infrastructure. What products we carry are also relevant to what our users want for that specific time of the day. We do have the stores. We do have the infrastructure. We do have also the supply chain and the transportation going from the distribution centers to the stores. Knowing what we expect to sell on a Monday morning versus on a Friday night also make it very, very different what we offer on a Monday morning in 50 minutes and what we offer on a Saturday night in 50 minutes. I think there may not be any vodka in the store on a Monday morning, probably.
This is a very big area of, and that also connects into when we procure from the suppliers, from the distributors, to which point of entry into our system. Is it the distribution center? Is it our stores? The last part is how can we make. You mentioned about last mile and increasing costs and how you pass it to the consumers, but our vision is how can we create all this data, understand when the demand is coming in, what is the time it takes for a task to complete, and which tasks we need to actually run throughout the day or the week to run the business, and then be very efficient in minimizing the idle time.
Where you think about idle time, if you think of all your riders, but if the moment they don't have a delivery can receive products or can do something else, and we can optimize it and time it properly, that reduces our operating costs, and then that's something that the consumer doesn't have to pay. We view as an end-to-end ecosystem that runs across the customer, supply chain distributors, and then the last mile fulfillment.
I wanna hear you guys, but just real quickly for both of you, since you've kind of sat on the edges of it, are you doing private label right now? 'Cause if you have all the data and you know what people are doing, is that a key part of the model, or is it now upsell?
We already do private label.
Mm-hmm.
for certain products that they have a lot of demand.
Yeah.
We are looking into expanding and having a lot more products in private label.
Yeah. Daniel, you guys are doing it as well?
Yeah, we're about to launch it.
All right. Yeah. Okay, Fred, you're just moving along. What does a city look like in X number of years, and where do scooters fit in?
I hope more like Copenhagen and less like New York. No, I mean, our vision is, as I talked about before, to reduce dependency on private cars and heavy traffic in city centers. I think in a couple of years, we will actually see that cities look much more like Copenhagen and Amsterdam than like New York, Moscow, which are still very heavily dependent on cars and heavy traffic.
We believe we will see more e-scooters, more e-bikes, more shared bikes, more other modes that we don't even see on the streets today, but they are connected with public transit, trains, buses, BlaBlaCar, as I talked about, and that we have this holistic customer proposal that makes it much easier for customers all over the world, in all cities to make the decision and make the choice to not have their own car, but use all these different services, shared ones and not shared ones.
I guess that, I mean, do you guys? Does success necessitate, you know, does a rising tide lift all ships there in the sense of, you know, in a world where people aren't buying cars, they need to carpool more, they need to take scooters? Like, what is that the vision?
No, but I think we're aligned. Less cars means more sharing cars. For us, it works very well.
Yeah.
You divide the number of cars by four, and then you're 464 in each car, then it's more car sharing. Same for flying cars. As long as you can share flying cars, it works for BlaBlaCar. The way we see the future is cost of energy will increase.
Yeah.
Because energy supply will be constrained, so we'll have to travel more efficiently. That efficiency will come with the technological improvements, right? But on top of it will come from sharing of different form of mobilities, whether it's micromobility or long distance, the consequences will be the same unless you find a way to, you know, teleport yourself or something. Until then, we're fine.
Got it. Again, I know I realize I'm the last thing standing between everyone and food, but I did want to leave five minutes for questions if anyone has any questions for panelists. I do not see any, as I said, because I'm standing between everyone and food. Okay. Then I'll ask my final question in my five minutes I have remaining. If you guys were gonna pick not your own company, but since everyone's deep into the space, you know, but sort of a company that's or in and around your space that you would bet on that's not yourselves, who would you pick? Start with Daniel's shaking his head, so I'll start with him.
I would propose a company called mPharma, which is very similar to our company but in the pharmaceutical supply chain focused in Africa. Dealing with a lot of very similar issues. You know, even I think yeah more challenging in some ways, but obviously bigger opportunity, as they figure it out as well.
Got it. mPharma?
mPharma.
Got it.
I think of a company, I think it's Swedish also, it's called RELEX. We're working with them already, and it's a lot about planning optimization and digitizing and making opportunities into how more effectively plan and procure. I think more and more we will rely on data to make the business and different decisions more efficient, and I think it's a great opportunity there.
What's it called? Relia?
RELEX.
RELEX, okay. All right.
An obvious one, so all of you can do some research after this. Now, a company we work with that I like is called Zoba, Z-O-B-A, which is a Boston-based data machine learning company, building models for how to optimize movements in cities. We worked a bit with them on-
Mm.
How to understand and predict demand and how to optimize your just-in-time supply layer. Zoba, Z-O-B-A.
Mm-hmm. Cool.
It's a very difficult question. Given that we don't see really a competitor of BlaBlaCar in the way we are a platform, in our industry there's a company I'm thinking of, but it's a target and we're talking to them, so I'm not gonna use the name. In terms of marketplace model, the
Just tell us. Come on, no one's gonna tell. I promise. We'll keep it between ourselves and the live stream.
The Etsy or Airbnb business model applied to mobility for BlaBlaCar would be a good benchmark of what we're trying to achieve in terms of a C2C approach. No, in mobility I don't. I'm short of names.
Yeah. Okay. All right. Well, thanks everyone. Enjoy. Thank you, Per.
Thank you everyone. Thanks, panel, especially Aspa, because we haven't invested in you yet, but we share all this with everyone else. I hope that whole day has given you more insight into our portfolio specifically, so it can help you sort of see where there's value. But also my feeling from this panel, thanks Keith for running it so super well, is also the sense that, when one follows the stock market and all the volatility, one sometimes feels like, is there any good private companies out there? I think you agree with me that there's so good companies in the private space that are out there selling good products in a thought-through way, so super big market.
That's also a good sort of thing to take with you to lunch. Because now there's lunch just outside. After that there's one-on-ones and yeah. Well, thank you for coming. Thank you, Jefferies, if there's anyone here, for hosting us in this nice building. Thanks.