Just Eat Takeaway.com (LON:JET), hereinafter the “Company”, or together with its group companies “Just Eat Takeaway.com”, one of the world’s largest online food delivery marketplaces, has reported its financial results for the first six months of 2021.
Statement of Jitse Groen, CEO of Just Eat Takeaway.com: “In the first six months of this year, Just Eat Takeaway.com continued to invest significantly, predominantly in the historically underinvested legacy Just Eat countries. Our consumer base, restaurant selection and order frequency have strongly increased, which will lead to improved profitability going forward.”
· Revenue on a combined basis grew by 52% to €2.6 billion in the first six months of 2021, compared with €1.8 billion in the first half of 2020, on a constant currency basis. Adjusted EBITDA on a combined basis for Just Eat Takeaway.com was minus €190 million in the first six months of 2021, representing an adjusted EBITDA margin of minus 1.3% of GTV, reflecting the significant investment efforts of the Company.
· In the first six months of 2021, the Company invested predominantly in the historically underinvested legacy Just Eat markets, through its three strategic pillars: (i) supply expansion and roll-out of Delivery, (ii) brand awareness and share of voice and (iii) customer experience and value proposition, including price leadership. These investments have led to superior growth, and increased online share gains in many markets, including the UK and Australia.
· Given the widening of the price gap in consumer delivery fees versus its competitors, the Company has more flexibility to improve its adjusted EBITDA going forward. While the benefits from this development will already be visible in the second half of the year. Just Eat Takeaway.com will continue to invest significant amounts in providing the best and most affordable service to its consumers across the world.
· Just Eat Takeaway.com has reached the peak of its absolute losses in the first half of 2021. Improved profitability will be driven by the growth and increased scale of the business, flexibility from the widening price gap, product and technology improvements, operational efficiencies, as well as fee caps which are expected to partly fall away going forward.
· In the first six months of 2021, Covid-19 related commission fee caps and restaurant support initiatives amounted to €142 million. While some of the fee caps have fallen or will fall away in the second half of 2021, fee caps in some regions have been prolonged despite a previously announced timeframe linked to the end of the state of emergency or restaurants being able to operate at full capacity again. Fee caps are counterproductive and market disruptive as they will ultimately impact the revenue of partner restaurants caused by higher consumer prices, and slow-down further innovation and investment in the sector. Management believes that these fee caps are unlawful, and the Company will join the industry to oppose any extensions.
· In the first six months of 2021, Just Eat in the UK added a record number of 58 million orders to 135 million orders, representing the highest absolute order growth in the sector, about double the absolute growth pace of its competitors. The average monthly order frequency in the UK reached 3.2 times, up from 2.5 times a year ago. In London, Just Eat gained approximately ten absolute percent points online share[3] since the beginning of the investment programme in the third quarter of 2020.
· In the first six months of 2021, further investments were made into the roll-out of Delivery in Germany, while improving operational leverage. The German business generated €94 million of adjusted EBITDA, up 63% from €58 million in the same period of 2020. While overall orders were growing by 62%, Delivery orders in Germany grew by 110%.
· Canada, including fee caps and restaurant support initiatives of €32 million, generated €4 million of adjusted EBITDA in the first six months of 2021. SkipTheDishes opened the first SKIP Express Lane, which makes it the first large player in Canada with a convenience delivery hub (“dark store”). The Company believes it can run Express Lane profitably at scale, because of the underlying profitability of the whole Canadian business, which is almost fully a Delivery business.
· In the United States, Grubhub processed 134 million orders in the first six months of 2021, representing a growth rate of 27% compared with the same period in 2020. Orders grew throughout the country, and during the first half of 2021 Grubhub began to see a post-Covid-19 recovery in large city downtown areas, particularly Manhattan, as well as in its corporate business. Grubhub will refocus its investments to expand its strongholds. It has initiated a rebrand in the US to align with the global Company. Furthermore, the Seamless brand is planned to be integrated into Grubhub starting later this year to make more efficient use of its marketing resources in New York. The cohorts look very promising, even as benefits from Covid-19 related demand have started to dissipate. Grubhub added over 30,000 partnered restaurants during the first six months of 2021 and recently announced a partnership with Olo, which will enable Just Eat Takeaway.com to add tens of thousands more POS integrated restaurants to the marketplace.
· Management reiterates its guidance for the full year 2021:
o Order growth (excl. Grubhub) above 45% year-on-year;
o GTV (incl. Grubhub on a combined basis1) expected to be in a range of €28 to €30 billion;
o Adjusted EBITDA margin (incl. Grubhub on a combined basis1) in a range of minus 1% and minus 1.5% of GTV.
· The Company’s cash position amounted to €1,519 million as per 30 June 2021.
· Management reiterates its intention to monetise its 33% stake in iFood if an appropriate offer is made that reflects the size and superior growth of this asset. The highest bid to date amounted to €2.3 billion and fell short of managements expectancies.
Segment information
In the first half of 2021, we built on the strong momentum generated in 2020, maintaining strong organic order growth and completing the combination with Grubhub. We observed strong consumer acquisition trends and online share gains from our investments in marketing and our Delivery offering (restaurant selection and consumer price leadership), giving us confidence to maintain this investment throughout the period. The below paragraphs of this section are presented on a combined basis only, as it most accurately reflects the performance for the periods under review.
Following the combination of Grubhub and Just Eat Takeaway.com, the Company has five reportable segments: United States, United Kingdom, Germany, Canada and the Netherlands. The other countries have been combined into an “all others” segment which is named “Rest of the World” (which comprises Australia, Austria, Belgium, Bulgaria, Denmark, France, Ireland, Israel, Italy, Luxembourg, New Zealand, Norway, Poland, Portugal, Romania, Spain, and Switzerland).
United Kingdom
In the United Kingdom, Just Eat processed 135 million orders in the first six months of 2021, representing a growth rate of 76% compared with the same period last year. Delivery orders for the first six months of 2021 grew more than 700% compared with the same period last year. The Just Eat brand gained online share in the UK, including a significant inflection in London with triple-digit order growth in the first half of 2021 compared with the first six months of 2020. This significant growth was driven by our investment programme in marketing and Delivery, increasing brand visibility and targeting a period of aggressive price leadership and the expansion of restaurant supply, including our partnership with household brands such as McDonald’s, Greggs, Pret A Manger, Itsu and Chipotle. We added further choice to our platform in the first half of 2021, where we were proud to welcome more than 90 new brands including Leon and Le Pain Quotidien, as well as successful roll-out and activation of national coffee brands Costa Coffee and Starbucks®. At the end of June 2021, the number of restaurants in the UK increased to more than 58,000 from 50,000 at the beginning of the year. Also in the first half of 2021, we further increased brand coverage both nationally and in London by leveraging our Global campaign, local activations of new restaurant supply, and sponsorship of UEFA EURO 2020.
In the first six months of 2021, GTV increased by 63% year-on-year, 13 percentage points below order growth mainly driven by the step change in quick service restaurant (QSR) supply, whose orders typically carry a lower basket value. Revenue grew by 82% to €552 million in the first half year 2021 from €303 million in the same period last year. The revenue growth rate was higher than both the order and GTV growth rates, following the rapid increase in Delivery orders.
Adjusted EBITDA was minus €71 million in the first six months of 2021 compared with €127 million in the first half of 2020. The lower adjusted EBITDA reflected our continued investments to win online share, including increased restaurant selection, marketing, and our price leadership strategy.
Germany
In Germany, our brand Lieferando processed nearly 80 million orders in the first six months of 2021, representing an order growth of 62% compared with the same period in 2020, driven by our continued investments in expanding our restaurant network, marketing, and Delivery selection.
GTV reached nearly €2.0 billion, an increase of 77% compared with the same period last year. GTV growth outpaced order growth driven by higher average transaction values.
Revenue in Germany grew to €284 million in the first six months of 2021 from €161 million in the first half year of 2020, representing a 76% increase. This was predominantly driven by an expansion of the Delivery business, which has higher revenue per order because of higher commission rates and delivery charges.
Adjusted EBITDA increased significantly to €94 million in the first half of 2021, up 63% from €58 million in the same period last year driven by continued strong operational leverage and despite significant investments in Delivery. Investments made over more than a decade have secured clear leadership in Germany, which positions us to capture the continued, highly profitable growth in this market.
Canada
In Canada, the SkipTheDishes brand continued to perform strongly, and orders grew by 54% and reached 57 million in the first half of 2021 compared with 37 million orders in the same period last year.
Revenue grew to €317 million in the first six months of 2021 from €228 million in the first half year of 2020. Revenue growth was 15 percentage points behind order growth, mainly caused by €32 million of restaurant support initiatives, including €22 million temporary commission fee caps during the Covid-19 lockdowns. The value of Covid-19 related restaurant support packages doubled compared with the same period last year.
At the end of 2020, a loyalty and reward programme were launched, driving high retention and increased frequency of our consumer base. Canada currently has the highest order frequency within our reportable segments. Investments in our brand and network, as well as continued best-in-class reliability, market-leading fee transparency and unparalleled partner choice of approximately 45,000 restaurants, drove sustainable growth and efficiency in the market without relying on discounting or vouchering.
SkipTheDishes continued to lead the market in online food delivery in Canada. Despite offering significant support to our restaurant partners, adjusted EBITDA amounted to €4 million in the first half of 2021 from €29 million in the same period 2020.
The Netherlands
In the Netherlands, Thuisbezorgd.nl processed more than 31 million orders in the first half of 2021, representing a growth rate of 37% compared with the same period last year. In the first six months of 2021, GTV grew by 48%, outperforming order growth, driven by an increase in average transaction values.
Revenue grew 50% to €120 million in the first half of 2021 from €80 million in the same period last year. In addition to GTV growth, revenue also benefitted from strong growth in the Delivery business with higher revenue per order as well as growth of promoted placement revenue.
Adjusted EBITDA increased to €40 million in the first six month of 2021 from €38 million compared to the same period last year. The adjusted EBITDA margin decreased mainly due to decreased marketing spend as a result of Covid-19 in the first half of 2020, and a higher Delivery share following our enhanced Delivery restaurant selection.
Rest of the World
In the first six months of 2021, Just Eat Takeaway.com processed 109 million orders across the Rest of the World, an increase of 54% compared with the same period last year. All countries grew orders year-on-year, with Australia, the largest market in the segment, generating triple digit order growth. Delivery orders grew 190% driven by investments in our price leadership strategy and enhanced restaurant selection. In the first six months of 2021, GTV reached €2.5 billion, up 59% compared with the same period in 2020. GTV growth outpaced order growth, mainly driven by higher average transaction values.
Rest of the World revenue grew 63% to €423 million in the first six months of 2021 from €259 million in the first half of 2020. Revenue growth exceeded GTV growth, predominantly driven by an expansion of the Delivery business, particularly in Australia, which has higher revenue per order because of higher commission rates and delivery charges.
The Rest of the World produced adjusted EBITDA of minus €136 million in 2021 compared with €7 million in the same period last year as a result of additional investment. This investment comprises several significant elements and is mainly focusing on previously underinvested legacy Just Eat businesses. Firstly, we invested in expanding our Delivery coverage and restaurant supply across all markets in the segment, which included costs in connection with the rapid roll out of our employment model in France and Italy. Secondly, we invested in a period of price leadership, offering free and discounted delivery fees for major restaurant brands and local restaurants focused on key cities. Lastly, we invested further in marketing, particularly our sponsorship of UEFA EURO 2020, leveraging our consistent branding across Europe.
Head office
Head office relates to non-allocated expenses and includes all central operating expenses such as staff costs and project expenses for global support teams like legal, finance, business intelligence, global operations and logistic teams, human resources, and the board. Not included in Head office are costs for global IT and product functions, which are allocated to countries and are therefore included in segment adjusted EBITDA.
Head office expenses increased to €96 million in the first half of 2021 from €84 million in the same period last year, which is clearly lower than the organic growth of the business. The absolute increase is driven mainly by investments we made in the expansion of global teams to support growth.
United States
In the United States, Grubhub processed 134 million orders in the first six months of 2021, representing a growth rate of 27% compared with the same period in 2020. Orders grew across tiers and throughout the country, and during the first half of 2021 Grubhub began to see a post-Covid-19 recovery in large city downtown areas, including markets like Manhattan, as well as in its corporate business. GTV increased by 19% year-on-year, or 31% on a constant currency basis, outperforming order growth by 4 percentage-points. This was primarily driven by higher average transaction values during Covid-19 lockdowns.
Revenue grew 22% year-on-year, or 33% on a constant currency basis, to €909 million in the first six months of 2021. Revenue growth reflected a mix shift to Delivery orders offset by an approximately €70 million year-on-year headwind from fee caps and voluntary partner support initiatives.
Adjusted EBITDA was a negative €25 million in the first six months of 2021, down from €30 million in the first six months of 2020. The adjusted EBITDA margin of minus 0.6% is down from 0.8% in first six months of 2020. The lower adjusted EBITDA margin reflected our commitment to support our restaurant partners through the pandemic, the impact of temporary commission fee caps, and increased courier costs. Courier costs were higher due to several mostly temporary factors including tight labour markets and a sudden acceleration in demand after distribution of government stimulus payments that caused short-term courier supply imbalances.
Strategy update
Just Eat Takeaway.com is the world’s largest online food delivery platform outside China. We are the #1 food delivery platform in Europe, Canada, Australia and a major player in the US. On average, our GTV in our leadership markets is twice as large as that of our closest competitor, which means that our growth and market position benefits from powerful network effects.
We are continuing to invest in and grow our proven hybrid model, which allows us to offer the broadest restaurant selection and best value proposition to our growing consumer base. We are committed to Delivery, which brings incremental revenue opportunities alongside our marketplace offering and where we benefit from significant efficiencies of scale given the size of our market positions. We maintain a disciplined approach to portfolio management, and we only invest in markets where we have or can create profitable market leadership positions. We intend to monetise our 33% stake in iFood if an appropriate offer is made. We are also exploring exciting growth opportunities, including our uniquely positioned B2B offering and our developing convenience (grocery) offering.
Online food delivery in our major markets remains in the early stages of penetration and we believe our markets have long growth runways ahead for many years to come. With our entrenched market leadership positions and hybrid model, we believe that Just Eat Takeaway.com is very well placed to drive significant profitable growth.
Just Eat Takeaway.com will be hosting a capital markets day on 21 October 2021 to provide the market with further details on its strategy and increased visibility on how the Company will capitalise on the exciting, long-term growth and profit opportunities across its business. This will include updates about our US market positioning, our growing Delivery operations, the convenience (grocery) sector, our technology leadership, and our approach to portfolio management.
