- Group GMV: Grew by 11.1% quarter-on-quarter.
- Take Rate: Increased by 1.3 percentage points to 12.5%.
- Advertising Revenue: Increased almost 30%, rising to 1.7% of GMV.
- Total Revenue: Improved by 12.5% for the group and 23.8% for Poland.
- Polish EBITDA: Up 35% year-on-year.
- Group EBITDA: Increased by 31.5% year-on-year.
- Capital Expense: Rose only 4% year-on-year to a total of 128%.
- Cash Conversion: 83%, up 4% versus last year.
- Leverage: Reduced from 2.6 times to 1 time year-on-year.
- Active Buyers in Poland: Added over 100,000 in Q2, totaling 14.9 million active buyers.
- Smart! Subscribers: Crossed the 6 million member milestone.
- Allegro Pay Loans: Originated PLN2.7 billion of loans, up 37% year-on-year.
- Allegro Pay Loan Balance: Increased only 8% year-on-year to PLN314 million.
- Allegro Delivery: Launched with over 18,000 out-of-home points.
- One Box APMs: 3.8 thousand in Poland and 140 in the Czech Republic.
- International Active Buyers: 2.5 million, with nearly three-quarters new to Allegro Group.
- Smart! Paid Subscriptions in Czechia: Over 100,000 paying customers.
- International GMV: PLN355 million for Q2, up 34% sequentially.
- Adjusted EBITDA for International: Minus PLN87.3 million, 24.6% negative margin.
- Leverage Ratio: 1.04x at the end of June.
- Q3 2024 GMV Outlook for Poland: 10% to 11% growth.
- Q3 2024 Revenue Growth for Poland: 16% to 18%.
- Q3 2024 Adjusted EBITDA Growth for Poland: 11% to 13%.
- Q3 2024 GMV Outlook for International: 3% to 6% decline.
- Q3 2024 Adjusted EBITDA for International: PLN150 million to PLN160 million loss.
Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group GMV grew by 11.1%, reflecting steady gains in active buyers and GMV per active buyer in Poland.
- Take rate improvements in Poland increased by 1.3 percentage points to 12.5%, boosting revenue.
- Advertising revenue grew by almost 30%, contributing significantly to overall revenue growth.
- Polish EBITDA performance increased by 35% year-on-year, indicating strong profitability.
- Successful international expansion, with the first positive contribution to GMV growth from the mall acquisition.
Negative Points
- Retail sales in Poland fell from 5.6% in Q1 to 4.9% year-on-year in Q2, indicating a challenging retail environment.
- Adjusted EBITDA growth is expected to slow to 11-13% in Q3 due to increased costs and marketing expenses.
- International operations, particularly the mall segment, continue to face challenges with a 35.9% decline in GMV.
- Higher delivery costs and investments in Allegro One and Allegro Delivery are impacting margins.
- Increased competition from platforms like Temu, AliExpress, and SHEIN, though currently at mid-single-digit transaction share.
Q & A Highlights
Q: Can you give some examples of the initial success that you're seeing in Hungary and Slovenia?
A: The Allegro marketplace for Slovenia and Hungary has not yet launched. Hungary is currently in progress, and other southern parts of the mall footprint are planned for next year.
Q: What are the incremental costs expected in Poland in Q3 that would lead to a slight erosion of the margin?
A: Half of the story is around monetization, as we made all the increases in Q1. The other significant item is marketing on the marketplace. We are also expecting to spend more on delivery costs and annual pay increases.
Q: Is there scope for Mall to breakeven?
A: By the end of 2025, we aim for the Mall business to make a positive contribution to the marketplace. This will come from a cost-efficient structure and focusing on profitable items, which means lower GMV but higher profitability.
Q: Do you plan to accelerate your investments in the coming quarter? What are the key areas of investment?
A: We expect a moderate increase in CapEx, focusing on delivery projects and expanding our locker network. We are also integrating Orlen lockers into our network, which helps manage costs efficiently.
Q: What is the current penetration of Allegro One in Delivery, and is the unit cost lower when using your own delivery framework?
A: The incremental cost of scaling up Allegro One is already below what it costs to pay another operator, but the average cost is still higher. We are making progress in reducing unit costs while improving service quality.
Q: What is the impact of the 1 percentage point GMV headwind from eBilet on Q3?
A: The impact is for the full quarter. Without the eBilet headwind, GMV growth would have been closer to 12% rather than 11%. The variability in the last two weeks of the quarter is due to weather-dependent autumn shopping season.
Q: Does the adjusted EBITDA guidance for Q3 account for any costs associated with the launch of new markets?
A: There are very small amounts of start-up costs included in the SG&A component for the international marketplaces, but it is not material at this stage.
Q: What gives you confidence to start expanding in Hungary this year?
A: Faster migration off legacy systems to a common application base reduces costs and improves efficiency. Hungary's proportion of total group sales is relatively small, and the benefits of moving to a common code base are significant.
Q: What is the share of next-day delivery for Allegro Delivery?
A: Within Poland, we aim for next-day delivery, depending on merchants dispatching orders the same day. Performance expectations are consistent across various couriers, including our own.
Q: What is the strategy behind productized offering listing?
A: The product view surfaces the best offer among multiple ones in the buy box, simplifying the shopping experience. This approach is particularly important for markets outside Poland and aligns with our mission to make shopping simple for customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
