Ladies and gentlemen, thank you for standing by. I am your technical call operator. Welcome and thank you for joining Allegro Group Earnings Call and Live Webcast to present and discuss the Second Quarter 2025 Results. All participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. You may also type your questions on the webcast screen. At this time, I would like to turn the conference over to Mr. Tomasz Poźniak, Investor Relations Director. Mr. Poźniak, you may now proceed.
Thank you, [audio distortion], and welcome to all participants of our call. Let me introduce the presenters of today. Marcin Kuśmierz, the CEO of Allegro Group, will provide you with the highlights of Allegro performance in Q2 and summarize the key takeaways. Mr. Jon Eastick, our CFO, will guide you through the financials for Q2 and update of the outlook for the full year 2025. As usual, our results presentation is available for download from our investors' webpage at allegro.eu. You may also download the slides from the link available on the webcast screen. As a reminder, today's presentation and discussion contains forward-looking statements. Our actual results could differ materially from the expectations expressed in such statements. Please make sure you review the full disclaimer on slide number 2.
Also, please note this presentation and the Q&A session are being recorded and will be available for a replay on our website at allegro.eu. With this, I would like to hand over to our CEO. Marcin, the floor is yours.
Good morning. This is Marcin Kuśmierz, CEO of the company. Thank you for introducing and welcoming the participants of today's conference call. At the beginning of our meeting, I would like to share the key financial and operating results achieved in the second quarter of 2025. Detailed information will be presented by Jon Eastick, our CFO, in the second part of the presentation. GMV on Allegro in Poland was close to 10% and more than twice as high as nominal growth in retail sales. We showed rapid growth compared to our competitors in the e-commerce industry, as well as traditional retail chains. We exceeded 15 million active buyers and also passed PLN 4,000 GMV per active buyer. Good results in GMV and increase in the number of buyers resulted in strong revenue growth, over 18% year-on-year.
Almost every part of our business developed well, but our advertising business line deserves special mention with over 30% growth year-over-year. It is also worth mentioning the take rate, which exceeded 13% in Poland and improved by nearly a half percentage point. We see that we still have very good potential for further growth in Poland. For customers in Poland, Allegro is the first choice, and we are consistently building our position in Central and Eastern Europe. At the group level, GMV increased by 9%, which was influenced by continued optimization of the Mall group. At the level of international marketplaces, in CEE, we achieved excellent GMV growth and demonstrated Allegro's consistency in building a strong position as a regional leader. The number of active buyers in the group exceeded 21 million, with GMV per active buyer increasing by over 4%.
At the group level, our revenues grew by over 10%, again with a good outlook for the future. Strong GMV growth and excellent revenue growth had a positive impact on adjusted EBITDA, which increased by 14% in Poland and by over 20% at the group level. Thanks to that, we are upgrading revenues and adjusted EBITDA outlook towards the top end of the range. We are constantly continuing our investment related to the development of the marketplaces functionality and making it even more attractive. We are also investing in the development of logistics infrastructure that supports the expansion of the Allegro Delivery program. As a result, our capital expenditures increased by 67% to over PLN 200 million. It is also worth mentioning the reduction in financial leverage, which was supported by strong free cash flow generation. Let me now present the four pillars of our development.
These are the strategic directions which we focused on the last couple of years. We are constantly investing in the development of the marketplace, our core business in both Poland and the CEE region, giving consumers the widest choice of products, ease of purchase, and range of added services. We are also developing new growth drivers, which on the one hand strengthen our core business and on the other hand build a long-term competitive advantage. They have a positive impact on the pace of our business development and make our business more diversified. I'm talking about advertising, financial services, and logistics. With each quarter, we are growing stronger in the markets of Central and Eastern Europe. Customers from Czechia, Slovakia, and Hungary are increasingly shopping on Allegro, building relationships with us, and taking advantage of our loyalty program.
They increasingly treat us as one of the main places to buy products based on our wide selection and attractive prices. We want to continuously improve our value proposition for buyers and sellers in the region so that, as in Poland, we are their first choice. We are also strengthening our foundations: technological, business, and human. We use a modern technological platform within the group, and we are building a culture focused on innovation and development. We are a company that invests in long-term growth and strengthening our market position. For a moment, I will focus on the value proposition we offer to buyers and sellers in Poland. We invest heavily in personalization and targeting products to the expectations of consumers and business customers. Allegro is a place where you can find the widest range of high-quality branded products. We are constantly attracting new sellers to the platform.
They represent almost all industries and business sizes. They are global corporations, as well as local micro-enterprises, and have a perfect understanding of customer expectations and needs. When I joined Allegro a couple of months ago, we almost immediately started a discussion with the management team and the board about the possibility of accelerating our growth and strengthening our market position. Allegro has almost everything it needs to conquer new market segments and attract new customer groups. It is the leading online shopping destination in Poland, and we see further prospects for strengthening our position. We are analyzing the market and the attractiveness of investment in its individual segments. In the coming weeks or months, we will discuss and approve strategic areas for making potential investments with the board. We have launched the process that we are calling accelerated evolution.
Our ambition is to be the leading shopping destination for current customers and customers representing future generations. We want to be a platform that addresses customer expectations and needs and is a friendly ecosystem that supports the growth of our partners. Let's start by discussing the core marketplace and how we see opportunities for its growth in the future. We will certainly accelerate investments in the development of marketplace functionality. For 25 years, Allegro has been the first choice for buyers and sellers in Poland and Central and Eastern Europe. We see potential in combining the functionality and added services of the 3P and 1P models. Everything that is the best about that. The 3P model remains our foundation, and we do not plan to expand our own product range or maintain larger inventories.
What inspires us in 1P and what we add to Allegro is sector expertise, consulting, and even better product management. Now, I will focus on the possibility of expanding our marketplace with new categories and market segments. The natural direction for the development of the marketplace is expansion of product offering. We currently have over 80 million products, but we still see opportunities to add some new product categories, accelerate GMV growth, and increase the frequency of purchases. We are also exploring the possibility of cooperating with brands that are not currently present in Poland and CEE to become a gateway for their market expansion. Services are a new area of interest for us. We are analyzing and looking with curiosity at the rapidly growing services segment in recent years.
We are carefully looking at the segments with the largest market share and the greatest potential, both those that support the sales of products, financial services, or insurance, as well as those that are independent. Customers trust Allegro. They have great relationships with us, and they want to grow with us. We believe that we will be able to create for them some new, special, unique value. The next point is potential externalization of services produced at Allegro as another area that could potentially support our growth. We are considering selling some services outside the marketplace. We create world-class products and, following the example of global players, we are thinking about selling them in other parts of the market. Our Allegro Pay is the best BNPL solution on the market. Our logistics infrastructure is the engine for the highest quality services.
This is a potential opportunity to build relationships with new groups of customers and sellers. We see a lot of interest and demand from merchants. We are talking with them about joint opportunities for growth, business development, and new directions for expansion. Finally, our goal is to update our value proposition so that customers continue to see its uniqueness and fully appreciate its value. For clarity, I want to underline that presented directions of development are fully consistent with the current strategy and are still the subject of our analysis and consultations with the Board. We are constantly investing in improving our value proposition for buyers and sellers. In the first half of the year, we developed a shop-in-shop service combining the shopping experience known from 3P and 1P models. The solution has been recognized by regional and international brands such as Finnish HP, Inglot, Karcher, or Pampers.
The number of authorized sellers representing well-known brands has also increased significantly. Now, we have over 3,000 of them on Allegro. Thanks to better management of AML and KYC processes by Allegro Finance, we have improved the merchant verification process. As a result, new merchants can start selling on Allegro much faster. As part of the partner channel, we are working with merchants to further simplify processes. Our ambition is to have the most merchant-friendly ecosystem among European marketplaces. Over 1.5 million products in Poland and nearly 0.5 million in Czechia are covered by the best price guarantee. This is further confirmation for customers that Allegro is the best shopping destination. With us, they can save some money and time. It is also worth mentioning the prestigious awards we received in the second quarter: Brand of the Year, Best Marketplace, and the Best Shopping Experience.
Smart! is one of the leading loyalty programs in Europe. We have added new benefits to it to activate and reward its users. The program now has many new additional features: fun and gamification, unique deals, and benefits to be used on Allegro, but also outside the platform. Smart! is extremely popular and attracts hundreds of thousands of new users every year. They also have access to unique events and promotional campaigns. In Poland alone, they are already over 6 million subscribers. We are happy to announce that Allegro Delivery has become the program serving the largest number of parcel lockers in Poland. Thanks to the new agreement with DPD, announced in recent days, the number within Allegro Delivery has exceeded 33,000, and the number of pickup points has exceeded 37,000.
Thanks to the close cooperation with DHL, DPD, AliPaczka, and of course, Allegro, buyers and sellers have even more choice in both delivery methods and locations. It is worth remembering that consumers always decide how they want their parcels to be delivered, and they use the Allegro app to track their shipments. Buyers on Allegro also have access to logistics services provided by other companies. By developing the Allegro Delivery program and our infrastructure, we are increasing the efficiency of our logistics services and our independence from selected service providers. By the end of the year, we want to have over 8,000 of our own parcel lockers, over 1,000 more than we originally planned. It is worth mentioning that thanks to successful negotiations with manufacturers, the installation of a larger number of parcel lockers will take place within the approved CapEx.
We have also decided to invest in new depots and a completely new sorting facility. This is associated with a rapid increase in managed volume, which exceeded 34% at the end of Q2 and increased by nearly 5 percentage points compared to the previous quarter. We are also achieving one of the highest NPS results in the industry, which amounted to 82 points in the second quarter. We are already seeing the positive impact of the cooperation with DHL, which began a couple of months ago, and we expect at least the same effect from the new cooperation with DPD. Let's move on to my favorite slide because it's related to AI technology. Our company is certainly one of the leaders in AI-based technological transformation. We do massive implementation in the company, which will cover almost all parts of the organization.
We are talking about areas related to purchasing, such as intelligent search engines or recommendations, increasing productivity in software development, and equipping our employees with new skills to improve their work efficiency. We believe in this technology. We have already implemented it commercially based on an agentic approach in marketing or customer experience or customer service, and we are convinced that AI is an investment with a high rate of return. We are constantly increasing the use of AI technology in our current and planned projects. We expect the next year around 40% of the software we produce will contain some components prepared or produced by AI. At Allegro International, we achieved excellent GMV growth in the second quarter, 61%. We also increased the number of Smart! users to over 1 million, and the GMV generated in the application grew by over 100% year-over-year.
Allegro International's sales are mainly based on Polish sellers, but we are also consistently increasing the number of local partners. We have launched a new program and are significantly increasing the number of local sellers and supporting them in their sales. We are also completing the transformation of some of our international assets. In the case of Mall North, the process has been already completed. In our international development, we focus on the 3P marketplace model and group synergies. The growth dynamics show that we are doing this better and better.
Thank you very much, Marcin, and good morning, everybody. It's great to be with you today, and I'm really looking forward to taking you through these really great Q2 results for the Allegro Group. As usual, I'll start with the Polish operations. Key KPIs are in front of you at the moment. Let me move to the next slide and the key KPIs behind the GMV. As you've heard, the business accelerated in Poland in the second quarter. The main driver for that was an increase in spend per active buyer. You can see there on the right-hand side that it's moved up sequentially to a 2% growth quarter -on -quarter, which gets us to PLN 4,178 of annual spend per customer, well over $1,000. That's an 8% growth rate on a year-on-year basis. In terms of active buyers, over the last 12 months, we've added over 300,000.
We're at 15.2 million active buyers for the Polish market. It's very important to remember behind many of these accounts are households. There are millions of more buyers on Allegro than you see here. When it comes to GMV, up 0.9% sequentially to 9.8% on a year-on-year basis, PLN 16.5 billion of GMV generated in the second quarter. On a last 12-month basis, that moves our GMV up to PLN 63.4 billion, which is 10.1% higher than this time a year ago. It's also important to note that in the second quarter, we had a headwind from the fact that Easter had moved back into April from March a year ago. For our categories, Easter is actually a headwind, unlike for the grocery businesses that you also follow. With that in mind, the result is even better than it looks at first sight.
As usual, supermarket and health and beauty, high-frequency categories that we're focused on, continue to grow faster than the average. This quarter, it was 2x faster. Looking for a physical measure of our development, as you know, we track items sold as a marketplace. That's up 11.4% on an annualized basis. It's also worth looking at the ASP on those items sold. Mix adjusted, the ASP is up by 1.7% year-on-year. This is the highest reading since the figures turned positive about a year ago, and it continues to move on an upward trend. A quick word on Allegro Pay. 15.3% of GMV was funded by the Allegro Pay payment methods in the second quarter. Loans origination has moved up to PLN 3.3 billion in the quarter. Let's look at revenue, and we've had an excellent quarter.
The growth has accelerated to 18.1% year-on-year, landing on almost PLN 2.8 billion of revenue. This is obviously coming from the GMV growth combined with the higher take rates, strong performances from advertising, logistics, and consumer lending. Focusing on the take rate, you'll remember from the previous call regarding Q1 that we increased the co-financing rates in our annual monetization change in March. There was one month of improvement included in the Q1 results. Obviously, we now have three months' worth in Q2, and that results in the take rate moving up sequentially to 13.01% for Q2. On an annual basis, it's almost half a percent higher than a year ago. You see as well on the bridge there, the rates of growth across advertising continuing to be over 30% quarter -after -quarter. Logistics moving up significantly.
More and more of the services or the deliveries that they're doing are actually also the paid deliveries that we do outside of Smart!, so the logistics revenues are going up. Also, financial income being a driver behind the other income that you see on the slide. With growth like that in revenue, it's relatively straightforward to grow EBITDA, and our EBITDA moved up by 14.2% for the Polish business in Q2. PLN 1.037 billion of adjusted EBITDA for Poland for the quarter. You can see the impact of those revenue drivers on the bridge. On the left-hand side, they're the first three items on the bridge. Let's focus in a little bit on cost of delivery. PLN 156 million higher cost of delivery than a year earlier, which translates to a 23.1% increase in delivery cost.
As a percentage of GMV, it's actually come down very slightly from Q1 from 5.1%- 5% of GMV. Most importantly, most of the growth in this cost has actually come from volume, from additional parcels from the higher GMV and from additional penetration of Smart!. You see that laid out there, 18.1% of the 23, plus another 3.5% where Allegro Delivery is delivering parcels that are being paid for by the consumers. That leaves only 1.5 percentage points of impact that's coming from higher unit cost. When you remember that on the 1st of January, we absorbed a double-digit indexation increase from our largest delivery partner, we're really very happy to see that we've managed to offset most of that increase in the Q2 numbers.
That unit cost increase is mainly held down in that way because of the growth in our Allegro managed volumes, which are up by 4.6 percentage points Q o Q to 34%. In essence, every single delivery that we move into an Allegro managed delivery method is at a lower cost than the alternatives, and this is why we're now starting to see a significant positive impact on our cost of delivery. Looking at the net cost of delivery, which requires also considering the revenues that are coming from co-financing, which are a part of the take rate, the net burden of running the Smart! loyalty program expressed as a percentage of GMV has actually come down in Q2 compared to Q2 a year ago. Final comment really on this slide is to draw your attention to the 6.27% adjusted EBITDA to GMV, which is 24 percentage points higher.
Sorry, decimal points higher. This is going to be the high point for the quarter, sorry, for the year. As we expect going forward, as the year progresses, that certain cost increases will need to be absorbed, higher salaries, higher costs of various delivery methods, other indexations, and therefore, the margin will come down a little bit later in the year. Moving on to capital investment, and we were signaling to you earlier in the year that the CapEx program this year is significantly more ambitious, and that's what you see in the numbers. 72% growth on a year-on-year basis for Q2 to PLN 193 million, which is mainly coming from an increase in other CapEx, which was up by 4x at PLN 80.3 million for the quarter. This is mostly obviously coming from investments in our logistics expansion.
It's predominantly APMs, but also investments in our courier depots and network. When it comes to capitalized development costs, those are up much more moderately, up 22% year-on-year or PLN 20 million. The tech team is slightly larger than a year ago. Obviously, salaries are higher than a year ago, and they're actually spending more time programming new functionalities that Marcin was describing earlier than on maintenance, which is also increasing the share of the cost which is being capitalized. When we compare to our medium-term guardrails, where we've set out a maximum of 25% of Polish adjusted EBITDA to be reinvested into CapEx, our H1 situation is that we're running at a 20% spend, so comfortably within the guardrails. Let's move on from Poland and take a look at the international operations. Key KPIs set out on the slide that you see in front of you.
I will come back to why this is on a pro forma basis in a couple of minutes, but let's focus in on the Allegro International segment for Q2. Now, as Marcin said already, it's been a very good quarter for the international marketplaces, which are our new marketplaces in Czech Republic, Slovakia, and Hungary. Great growth across the board. Starting with the traffic, it's up 47% year-on-year, and this despite the fact that we've actually dialed back on our marketing investments and really focused on improving the ROIs on those investments on a going-forward basis. Active buyers up even more, 57.4% of 3.9 million active buyers across the three markets, which is a really strong performance. Spend per buyer also moving up 10.2% higher than a year ago at PLN 540.
Looking then at the other key metrics, that means that the GMV growth was able to reach 61%, so very comfortably up at the top end of our outlook, and that's PLN 572 million of GMV from these marketplaces. Revenue was up even stronger at PLN 63 million, 111% higher than a year ago. The take rates are up by 2.6 percentage points on last year. More of the Smart! subscriptions are being paid for by the consumers. There's more revenue coming in from logistics, so altogether revenue is moving up nicely. That means that we were actually able to cut the size of the loss for the first time on a year-on-year basis. It's down PLN 21 million on a year ago, PLN 66.5 million invested in the marketplaces, and the margin to GMV has improved to - 11.6% in the quarter.
Let's move on and take a look at the Mall North segment. As you've heard from Marcin, we've essentially finished the projects around transforming the mall in the northern markets of Czechia, Slovakia, and Hungary. The main component of that has obviously been this intentional rundown of their legacy unprofitable e-shop business, which you see reflected here in the GMV for the second quarter, 58.7% lower than it was a year ago at PLN 184 million. That was only generating PLN 24 million of margin, as you see on the right-hand side. With other cost savings, we were able to actually cut the loss to PLN 55.7 million. Most importantly, because we've shut down now the independent operation, the independent front ends, we've been able to take further reductions in staffing.
We've also been able to move out of the legacy warehouse, which was too big for purpose, and move to outsourced logistics solutions. Those things will help us cut the loss much further in the second half of the year. Summing the two segments together, you get the results of international operations, which are shown on the next slide in summary form. Let me now come back to the topic of why those numbers were pro forma. We've made a change in the segment reporting between Q1 and Q2. What's triggered this is one of the points I mentioned, which is that we've finally shut down all of the Mall North front ends, the independent legacy front ends. Now Mall North only trades as a lean merchant selling over the marketplace.
Applying the accounting regulations, what that means is that the Mall North segment no longer has an independent route to market to generate revenues. In those circumstances, the segment needs to be rolled up into the bigger segment, the one that does have that capability to generate revenue. As a result, we now will be reporting the Mall North operation together with the new marketplaces going forward. To see this in numbers, take a look at the next slide. The key thing here is that the numbers themselves in total are not changing. The total international operations, which you see there on the right-hand side of the slide, is no different between the old way of doing the segmentation, the pro forma, and the new segmentation, which you'll find as reported in the financial statements. Exactly the same numbers.
The difference is that the Mall North segment moves out of Mall and into the Allegro International segment. You can see that in the gray boxes between the two tables. Nothing else really changes. What's left in Mall is just the Mall South business, which is in Slovenia and Croatia, where they continue to operate using their independent e-shop. The last part of this story is that the accounting rules also require, when you make a change in segments, to retrospectively restate all the history. We've shown you what that impact is for GMV on the following slide. On the left-hand side, you have the way we've been reporting the marketplaces and their growth historically. On the right-hand side, this new segmentation. What you see there is that the Q2 numbers are essentially exactly the same.
Going forward, you'll be looking at the growth of the marketplace as we continue to develop it. When you're looking at year-on-year growth rates, you're going to see the impact of that shrinking legacy Mall North growth in the prior year comparatives. That's going to make the headline GMV growth rates look lower for a few quarters. That's it for international. Let's move on and take a look at the consolidated group. I normally just talk about leverage when we look at the group numbers, and I'm going to continue that today. Let's start with the leverage as of 30th of June . It's moved down by 12 basis points of return to 0.72x adjusted EBITDA.
It would have gone down even more if we'd not made the decision to use some of the high cash balances at our disposal to increase the investment that we have in our consumer loan book. We put PLN 364 million to work funding Allegro Pay loans during the first half of the year, bringing the total to PLN 867 million. That, of course, means we retain a bigger share of the financial income that's coming from these loans, sharing less of it with our financing partners and helping our EBITDA. We've also prepared for you a pro forma calculation for 30th of June to show you what is the impact of the financing transactions that took place in the few weeks after the end of June. In particular, you see here the impact of the return of PLN 1.4 billion to shareholders via a share buyback for 3.7% of stock.
Taking that PLN 1.4 billion out of the balance sheet, in effect, has moved the leverage up to PLN 1.16 on a pro forma basis as of 30th of June . It will be coming down from there. We expect to be generating significant cash flow in the second half of the year, and we would expect to land around about that 1x leverage that we have in our medium-term guidelines and capital allocation policy as our target level for the group's leverage. Let me move on to the outlook, which, as you've heard from Marcin, is moving up for the full year. Let me just start with a quick look at how we've done at the halfway mark in comparison to the guidance as originally published back in March, which you see on this slide.
The key message here is across all KPIs and all segments, we're on track and the year is going very, very well indeed. Let's look at then current trading, which is laid out on the next slide. How has it been going in the third quarter? We're continuing a gradual acceleration of the Polish business. The GMV is up towards 10% year-on-year. On the international markets, the international marketplaces that were growing 61% in Q2 are still seeing growth in the 50%- 55% range. Reminding you as well, we're now lapping Slovakia as well as Czechia results in these numbers. The Mall North legacy front-end GMV that I was describing in the context of the segment changes means that the results for this segment as a whole are going to be slightly negative because we still have these figures in the prior year numbers.
The Mall South segment, which has continued to be reported separately, is shrinking, but that shrinkage has slowed to mid-single digits. Looking at GMV on a group level, we're actually growing somewhat quicker than we were doing in the first half of the year. That means moving on to look at the outlook update. As we get closer to the end of the year, we're either able to narrow the ranges because there's obviously less variability remaining, or in some cases, we've managed to move up the guidance because we're getting increasingly confident we're going to move towards the top end of the range. That's particularly true for the revenue and the adjusted EBITDA, where our expectations are moving up. A couple of numbers just to call out.
The Polish operations, we're expecting to come in on or around that 10% growth rate for the full year, but going faster in international than we were originally expecting. Revenues were up across the board. We're looking at 8 to 11% growth for the group and 16%- 18% for Poland. EBITDA costs very much under control, especially in Poland, so the guidance has moved up for Poland to the 10%- 12% growth for the full year. Capital investment, very much on track, no change in the guidance, but we are managing to do 1,000 extra APMs within the cost budget. I think you can agree that things are going well, and I'm going to hand it back over to Marcin to hit the key talking points. Marcin.
Thank you, Jon. Let me remind you of our key achievements in the second quarter of 2025. A very solid improvement in almost all financial and operating results. We are very pleased with the growth in GMV, revenue, adjusted EBITDA, and the increase in the number of users of our marketplaces and their growing spending. Advertising and financial services are developing very, very well and have good prospects ahead of them. We are successfully developing our international business, focusing on the 3P marketplace model. We're seeing solid and promising growth in GMV. We also have completed the transformation of Mall North in Czech Republic to Slovakia and Hungary, and we're continuing the strategic development of our logistics network and the Allegro Delivery program. Managed volume is already at 34% with an increase of nearly 5 percentage points quarter to quarter.
The new agreement with DPD will certainly have a positive impact on the efficiency of the logistics area, and for sure, it will be accelerating the diversification process. We also have completed a very successful buyback and achieved a historically high free float of 72%. Last but not least, we're working with the board about new potential growth opportunities to build additional growth drivers into annual strategy updates.
Thank you, Marcin. Thank you, Jon. We have just concluded the presentation, and we're ready for the Q&A session. [Dioda], over to you.
Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Holbrook , Luke with Morgan Stanley. Please go ahead.
Good morning, everyone, and thank you for taking my question. My first one is just on your delivery partner network that's now handling about 34% of your volume. As you mentioned, it's up 5% QoQ. It was up a similar percentage the quarter before. With DPD coming online, almost doubling, I guess, the amount of APMs you have through that network, how can we expect that to trend over the next two or three quarters if you could just map that out for us? Secondly, just on your comments that your delivery partners are now cheaper than your largest non-network delivery partner, I'm just kind of wondering how that looks in terms of when we can expect you to kind of announce the outcome of your renegotiations with InPost for your contract that's due to expire in 2027. Thank you.
Okay. Thank you for those questions. Let me start with the one about DPD. Obviously, we just signed the contract. There has been quite a lot of work going on in the background to get ready for DPD, but there won't really be much impact from DPD in Q3, obviously, because these deliveries will only kick in in the next few weeks. It will have much more of a significant impact on the fourth quarter, and you rightly highlighted the fact that there's a lot more APMs, 11,000 additional points, where we'll be able to funnel traffic. Although they're smaller APMs than the others, it means that it will also be a driver for increasing the Allegro managed volume metric, especially in the fourth quarter.
When it comes to the pricing, obviously, we are talking with InPost, and it's too early to make any predictions about if and when we will come to conclusions. We're very constructive about the situation, but we do need to see lower prices. Marcin, if there's anything you want to add to that.
Yeah, thank you, Jon. I think you know that we are truly focused on the development of Allegro Delivery, and you see that we are inviting new partners to the program, all major players on the Polish market. We just announced cooperation with DPD, the second player on the market. Thanks to that, we have the largest network of lockers on the Polish market and PUDOs as well. This is the crucial point for us, and we want to invest mainly in the development of this program.
Understood. Thank you.
The next question comes from the line of Ross, Andrew with Barclays. Please go ahead.
Good morning everyone. I've got a couple of things, please. The first one is just to double-click a bit on some of the investments that it sounds like we're discussing with the board to help growth accelerate. I'm wondering if you can put a bit of a framework around that in terms of when we might see these investments and kind of how you think about margin investment in that context, and then kind of when we might see Polish growth accelerate. I appreciate it's hard to be specific, but if you could just give us a bit of a kind of directional framework, that would be helpful. The second question is to kind of follow up on that. In the opening remarks, you spoke about the idea of taking or kind of selling some of your services off-platform.
On the fintech side, I think you touched on BNPL, but are there any other fintech services that you could envisage being sold kind of off-platform? You also touched on logistics. Can you just be more specific by what you meant when you spoke about kind of selling the logistics solution? Does that mean taking other kind of merchant volumes through the Allegro One network? Does it mean something else? It would be helpful to better understand by what you mean on that. Thank you.
Thank you for these questions. Of course, you know I just joined the company. I started in May this year, and of course, I was and I am still specialized in new business. If you look at my career and you know my development, I was always looking for some new opportunities, how to speed up growth, how to accelerate development of the company. I do the same here at Allegro. We started as a management team discussion with the board how we can accelerate our growth, how we see potential directions, also entering some new fields. This is the quite early stage. Of course, we see some new attractive parts of the market we can potentially cover. We see new product categories. We see services, as mentioned before. We see some cooperations or even strategic partnerships.
Thanks to that, we can add something new, something extra to the platform, and thanks to that, attract a new group of customers to us. You know that we have great potential and still, and we have a great position on the market, but the market is changing rapidly. We try to discover all the time some new possibilities, again, to help our customers to find all they need at Allegro, but also, of course, thanks to that, to accelerate our growth. We're also discussing how we can use existing products we develop at Allegro, using the example of Allegro Pay or using the example of our logistics infrastructure. They represent absolutely the world class. They absolutely are the best in class in those segments. We analyze how we can help our merchants, how we can use our infrastructure to be even more efficient.
What is the attractiveness in creation of some new capabilities for our merchants? Because finally, as we say many times, we want to build a very merchant-friendly ecosystem and to support their growth, of course, mainly on Allegro because we see and we know that this is the perfect place for them to do business together. We want to be as efficient as we can be. We have many innovations. We have some advantage in comparison to other players, and we want to use these tools to be even stronger.
Just to be clear on that, could that involve putting in kind of non-Allegro inventory through the Allegro One network?
Hi, it's Jon. If we were to go in that direction, it would almost certainly be on the Allegro Delivery level, right? It might be non-Allegro parcels, but across all the partners in Allegro Delivery. It's still at an early stage. As Marcin was saying, these are the areas that we can see a first look to expand our footprint of activity, which is another way to obviously find additional growth drivers. We're discussing these with the board in this year's planning round, and we would anticipate starting to make tangible moves on some of these once it's all been agreed over the next few months in our planning process.
Okay, that's helpful. Thank you.
The next question comes from the line of Reshetnev , Roman with Goldman Sachs. Please go ahead.
Yes, hello. Thanks for taking my questions and congratulations on the solid set of results. Just to follow up on logistics, InPost previously mentioned that 30% of their Allegro checkouts in Q2 included a prompt to use your delivery network. Given InPost's legal action and some customer pushback reported in the media, could you comment on how you view this situation from your side? As we enter the high season when service quality becomes more sensitive, how sustainable is this approach for volume redirection for you going forward? The second one on logistics, following the recent partnership agreement with DPD, what would be your long-term vision for logistics in Poland? Given you still have a long way to build out your own network and considering your stronger leverage position, would you look at some M&A opportunities in the logistics space? Thank you.
Okay, thank you. Thank you for the questions. I think the first part was relating to the arbitration case, if I understood correctly, that InPost has brought under the scope of the long-term contract that we have that runs until 2027. As we actually showed in one of those slides that Marcin put up earlier, we have the capability to prompt customers in the checkout process to see and to consider using lockers which are now available under the Allegro Delivery framework, either because they've just been deployed or because we've added partners. We do that. We make use of that. I'm not going to comment on what percentage of the time, but we don't use it all the time. We respect the choices of consumers.
What's most important there is that in accordance with the agreement, the customers have just one click on the button that says change, and they can see the full list of all the available delivery methods that they have at their disposal, and they're able to pick whatever they want. We will see what happens in the arbitration, but we don't think that there's any merit to the claim. The second part was M&A and logistics. We don't really comment on M&A. I don't think there's any need to be considering M&A. The Allegro Delivery approach is working extremely well. The partnerships are working extremely well. Who knows in the very long term what may happen in an industry, but in the short term, there's no comment to make on M&A.
Yes, thank you very much. Just to follow up on the current trends, given that you already highlighted an update on the third quarter GMV growth, and since we are now in the high season, could you also elaborate on the EBITDA growth trajectory? Specifically, how would you describe the activity of Chinese marketplaces in Poland and internationally over the last month, and do you still see them driving significant pressure on customer acquisition costs?
Yeah, thank you for that question. Let me come back to the margin. Obviously, the margin was up to 6.27% in Q2, but we try to limit our monetization moves to once a year, and we've been doing that for a couple of years now in the first quarter. It tends to generate a high watermark in the margin in the second quarter, and it will then trend down somewhat over the rest of the year because those salary raises, for example, are in April. Generally speaking, delivery partners need some kind of indexation increase during the course of the year. The IT providers are obviously also looking for increases. As these things come into the numbers, plus a natural trend for the take rate to drop lower in the fourth quarter, it means that the average margin for the year will be lower than that 6.27%.
Obviously, you can back calculate it into the guidance that we've given you today that it's expected to land just under the 6% mark for the full year. The second part of the question was around the Chinese. We are seeing an increase in activity, this kind of rebound or the knock-on effect, if you want to call it that, from the tariffs and the changes that were imposed in the U.S. There is clearly more activity of the Chinese players across Europe, not only in Poland, in recent months. We're still not seeing a significant increase in the rate of increase in our own surveys. They're still in the similar sort of range. There's a lot of top-of-funnel activity. We don't see that much of it coming through in the surveys that we do that try and look at where people are actually shopping in the month-to-month surveys.
It is having an impact on our marketing spending. I didn't touch on it in the EBITDA slide, but you can see that we're up about, I think, 17% on a year-on-year basis. We're fighting on all fronts for the share of voice on all different advertising media. We're not going to cede any ground. We are the leader in this market. They're an important player.
As Jon said, we see kind of limited direct competition because Chinese players, of course, they are strong, they are innovative, but they cover different parts of the market, mainly being focused on most price-sensitive customers. This is, by the way, they show some potential for us or some parts of the market to be covered. We should remember that the strength of Allegro is based on cooperation with hundreds of thousands of merchants from Poland and the region, and we have the widest selection of branded products. We see, of course, some rising competition, but right now we see that we cover a bit different parts of the market.
Okay, thank you very much.
The next question comes from the line of [Briest, Michael] with UBS. Please go ahead.
Hi, good morning everyone. Thank you for taking my questions. I just have follow-up questions. The first one on your net cost of delivery, it seems to have plateaued at 5% of GMV. My question is, is this the level you are satisfied with, or should we expect that to return to growth in the coming quarters? The second question, another follow-up, this time on the Chinese competitors. I just wonder, I mean, it seems that Marcin was lobbying in Brussels. There was also an article in FT on the topic, so maybe you can share some intel. What are your expectations on the potential regulatory changes in either Europe or Poland, which could even the playing field between the international marketplaces and the incumbents? Thank you.
Okay, let me take that first question. The cost of delivery that's at 5% of GMV is effectively the gross cost.
We call it cost of delivery these days. The short answer is we'd like to see that going down over time, right? The way to do that is to successively blend lower than the average unit cost methods into the mix. We're on a good path to do that using the Allegro Delivery solution, and hopefully, at some point as well, we may make a modified deal with InPost, but also obviously have a big contribution to that cost. The total burden, though, of running the Smart! loyalty program and paying for deliveries is, as I mentioned, you need to take into account the co-financing, which is up in the take rate. The net of the two, we talked about in a bit more detail in Q1 in the previous update.
When you net one against the other, the 5% comes down to about 2.5% of GMV, which is the net cost of running the Smart! loyalty program. The comment I was making earlier was that it's ticked down fractionally on a year ago as a result of the co-financing changes and this progress that we've made on controlling the gross cost. Hopefully, that's clear. The second question was about the Chinese.
Yeah. We don't expect any kind of protection for Allegro or other European players. The only thing we expect is fair competition and to have the same rules for every single player existing or selling some goods on the European markets. We know, you know as well, that this is today unfair competition. We see that, for example, the U.S. is acting faster and protecting the market against unfair competition. Our expectation is almost the same. We appreciate that some companies invest in the development of European markets, and this is great. We want to build our competitive advantage thanks to having the same rules for everyone.
Thank you, but do you have any more specific expectations about potential changes, the timing, etc.? Thank you.
This is quite a complicated or complex topic, and of course, we work with other European players to create some pressure or to explain why some Chinese players use the European market on different conditions than we. Of course, we explain to authorities how the market should be defined and how we should act with some initiatives. We are quite patient, but of course, we see that some Chinese players have some advantage, not because they are much clever or they are stronger or much more innovative, but because, for example, they are using some unfair advantage.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no further audio questions at this time. I will now give the floor to Mr. Poźniak for any questions from our webcast participants.
Thank you, [audio distortion]. We have quite a long list of questions. Luckily, part of them already answered when they covered the questions asked by the analysts so far. Some of them, I believe, were explained during the presentation, the ones that came early. I will address them by topic rather than question by question because they touch upon the similar points. The first question would be, where are we with the co-financing and how much headroom we still have to improve it?
Yeah. Thank you for that question. The co-financing move that we made in March moved the share that's being carried by the merchants up to approximately 45% of the total cost. That will tick down, as I said, as we absorb indexation increases from some of the players that have different timing to InPost in their contracts.
Essentially, we don't have plans to move it up very quickly from here. The long-term expectation that we've mentioned many times is that we see a 50/50 split as being something which merchants can comprehend and still be excited about, and it's very typically the level that you see around the world. We probably will get there eventually, but we would think that, you know, we've gone from zero co-fi to this level in about four years, and, you know, we won't be moving up so quickly going forward.
Thank you. I believe the next question would be to Marcin, because this is asking about the AI-driven marketplaces. You know, AI chat's taking away our business. Can you comment on this?
Yeah, absolutely. We do cooperate with all major players, producing AI technology or potentially giving us some access to AI capabilities. We rather perceive it as a chance for us to have additional sales channels. This is not kind of competition. This is something supportive for us. We, again, do cooperate with all major players providing this technology. We know how to use it to improve efficiency. We know how to use this technology to achieve better conversion on our marketplace and how to create some new extra value, thanks to purchasing through applications. We perceive it as something positive to us and hope that new models will be implemented commercially quite soon, because as said during the presentation, we are pretty matured with this technology and we know how to build an advantage of using AI.
Thank you, Marcin. The next question would also be to you, I believe, because this covers the recent changes to the regulations concerning access to the Allegro API. This has triggered some comments on the web. What is the main reason for doing this, and can this have impact on our KPIs?
This is an interesting topic, but this is a technical change because API is the protocol used by our partners to manage their products on the marketplace or to automate some processes. Some of our partners shared the access to API to other companies without permission. For example, we do invest heavily in the development of API because this is something that supports and boosts sales on the marketplace and also helps our merchants to be much more efficient. This is something that we want to secure, the efficiency of this protocol and to help merchants.
Thank you. The next question, international operations, are they still a strategic priority for the group or could potential exits from loss-making operations be considered?
This is a strategic point or strategic direction for us. Of course, we are still mainly focused on the development of the Polish market. We are here over 25 years, but we are present in the region not by accident. This is something like a strategic move for us. We see that we are able to create some special unique value for customers living in Czechia, Hungary, or Slovakia. We see an increasing number of customers using our marketplaces and an increasing number of Smart! users. We also see huge demand from merchants using our marketplaces to cover some expectations of people living in the region. There is no consideration today that we will be only a Polish company. We want to stay in the region and we want to develop these markets. This is quite an early stage of development. Let's remember about that.
We are consequently improving our position and our competitive advantage in comparison to any other player on the market. Yes, we want to invest and we want to be there.
Thank you. I believe we have time for just last questions. Could we comment on the OCCP case related to our trees being planted for the packages delivered in Allegro boxes? Status and potential impact on the financial.
Yeah, there isn't too much to add. There's a conversation going on with OCCP about their findings. We don't know how that will play out. We planted an awful lot of trees, which we're actually very proud about, and we want to continue that. As part of our branding identity, Allegro won, but it's also inherently, intrinsically a very good thing to do. If something happens, then you know we will reflect it in the financial results. We certainly don't expect anything material from it.
Thank you, Jon. That was the last question answered by the management. I will address offline a few technical questions that are still there. Thank you very much, everyone, for participating. [audio distortion], over for you for the conclusion.
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