JUST EAT COMPANY PRESENTATION MAY 2014

Transcription

1 JUST EAT COMPANY PRESENTATION MAY

2 JUST EAT MISSION STATEMENT We are a SALES MARKETING OPERATIONS TECHNOLOGY company 1

3 HOW DOES IT WORK? Consumers JUST EAT platform Order and pay online Order transmitted to TRs over mobile network Deliver to consumer Order accepted by TRs (JUST EAT processes payment and holds TR cash from credit/debit card payment prior to distribution) Takeaway restaurants (TRs) JUST CONNECT terminal GPRS Real-time e-commerce JUST CONNECT Terminal JUST EAT Servers 2

4 JUST EAT AT A GLANCE History of leadership A leader in the online takeaway business 2001: established in Denmark 2006: launched in the UK 2009: accelerated international expansion Experienced team across functions and geographies Scale 40m orders in 2013, generating total transaction value of over 650m 2013 net revenue of 96.8m 2013 ( 80.4m in the UK and Denmark) 2013 Underlying EBITDA of 14.1m ( 30.2m in the UK and Denmark) Over 36,000 contracted TRs >50% of orders via mobile in the UK c.1,000 employees Large & growing market Multi-billion pound highly fragmented takeaway market, growing faster than GDP Online ordering growing much faster, fueled by adoption of e-commerce and smartphone/tablet penetration Takeaway Restaurants are a high margin business, technically unsophisticated, but commercially savvy Proven internationalisation Clear online takeaway market leader in: Denmark UK 11 new territories since 2007: 8 additional countries in Europe Canada, Brazil India Source: World Economic O utlook Database, Euromonitor, C allcredit Report and JUST EAT 3

5 ROBUST AND ACTIVE RELATIONSHIPS WITH TAKEAWAY RESTAURANTS JUST EAT provides High order volume and yield Huge online presence - Industry-leading SEO and PPC - Bid on over 3.5m active keywords globally More efficient order processing Clear print out from JCT Ancillary benefits Collective buying Local field salesforce Well recognised brand Free up the phone line Ability to pay for promotion JUST EAT acts as stamp of credibility (branded TRs) Sales visits Higher average order value Minimal staff time/ commitment Marketing promotions Roll out technology to industry Conferences Offer platform - Targeted and relevant offers Source: JUST EA T 4

6 SIMPLE, PERFORMANCE BASED REVENUE MODEL 87.5% of revenue driven by consumer orders Order Driven (B2C Revenue) A Commissions c.10-11% of order value Same price for consumers as ordering directly from TRs Revenue Mix (Group 2013) 75% C Connection fees revenue One-off cost paid by TRs to join the network 1 Pricing depends on market maturity 12% 8% 5% B Payment card/admin fees revenue Small fee mainly charged on payment card orders c.60% of orders paid via card D Top placement fee and other revenue Top placement Restaurant products (bags, pizza boxes, menu cards, etc.) Source: JUST EA T ¹ With the exception of Denmark, w here TRs pay an annual subscription fee. 5

7 PROVEN SUCCESS AND LONG TERM RUNWAY Denmark (11.9% revenue) Proven success UK (71.1% revenue) Proven and high growth Other (16.8% of revenue) Proven strategy JUST EAT Denmark Most attractive market in Europe Other JUST EAT markets have commands c.44% of all deliveries and c.90% of all online orders - Delivered takeaway food market size estimated by Callcredit Report at 4.4bn p.a. even lower online penetration and represent significant growth opportunities - Substantial runway - Online penetration by JUST EAT of takeaway JUST EAT Denmark Still relatively low online ordering is only 2% in demonstrates 40%+ marketplace penetration France Underlying EBITDA margins - Online penetration of takeaway ordering at 20-28% in the UK, of which JUST EAT is c.50% - Domino s Pizza s current digital penetration at 69.4% Source: C allcredit Report, JUST EA T management estimates and Domino s Pizza trading update as of Q Note: Percentages of Group rev enue based on 2013 financials. 6

8 DELIVERY TAKEAWAY FOOD MARKET IS LARGE, RESILIENT AND GROWING A delivery takeaway food market of c. 58.0bn Total Annual Delivery Takeaway Order Value ( bn) JUST EAT Markets bn Non JUST EAT Markets 38.0bn Supported by strong drivers Urbanisation Lifestyle change Increasing taste for exotic cuisine Increase in smartphone penetration Structural growth faster than GDP Example of UK Market 3 5.4% 5.8% Other² Other 1.1% 2.5% Size ( bn) UK Denmark France Canada Italy Netherlands Spain Brazil US CAGR CAGR Source: C allcredit Report; JUST EAT management estimates 1. O ther exclude India. 2. O ther markets include Norw ay ( 370m), Belgium ( 673m), Sw itzerland ( 603m) and Ireland ( 233m) % Home Deliv ery / Takeaw ay (Euromonitor Sep-2013). GDP grow th projections from O ffice for Budget Responsibility. GDP Growth Takeaway Market 7

9 RAPID CHANNEL SHIFT TO ONLINE ORDERING The online ordering channel has grown significantly faster than the overall takeaway market Online penetration of takeaway ordering¹ Market Maturity Growth in online ordering set to follow experience of food chains Domino s Pizza s Digital Penetration in the UK² 49% - 58% 80% 70% 65.5% 69.4% 60% 55.7% 20% - 28% 32% 50% 40% 35.8% 44.3% 20% 30% 27.8% 20% 10% 0% Current online penetration in the UK Q France UK Canada Denmark Source: C allcredit Report, JUST EA T management estimates 1. O nline penetration measured as the number of consumers w ho hav e ordered takeaw ay food online as a percentage of the total num ber of consumers w ho hav e ordered takeaw ay food. 2. Domino s Pizza presentation Q 4 trading update ( ). Represent digital penetration as of H1 each y ear. 8

10 STRONG ONLINE PRESENCE AND BRAND DRIVING LOW COST PER ACTIVE ACCOUNT JUST EAT is the #1 brand in the takeaway food category Share of site visits in UK (%) 45% Award-winning marketing initiatives Most orders (c.88% in Q4 2013, UK) made through free traffic to websites 30% Domino s Top-of-mind awareness increased from 20% to 39% (between Aug and Dec. 2013, UK) 15% Toptable Increased visibility and brand marketing via takeaway restuarants (at no or little cost) Hungry House Aggregators share of site visits increased 0% Sep-2010 Sep-2011 Sep-2012 Sep-2013 Source: Experian Hitw ise and YouGov 1 A s per A pp A nnie Index, as of 31-Dec-2013 #1 ios free app under food and drink category 1 9

11 STRONG AND DEFENSIBLE MARKET POSITION SUPPORTED BY COMPELLING NETWORK EFFECTS Strong network effects drive scale Better choice of TRs attracts more consumers and increases frequency Robust, Scalable Platform 1000 Peak orders per minute (UK) Takeaway Restaurants (UK) Number of Orders (UK) k 20k 15k 35m 30m 25m 20m k 5k 15m 10m 5m 400 0k m More traffic and orders attract more TRs to JUST EAT platform Source: JUST EA T management estimates 10

12 CLEAR MARKET LEADING POSITIONS IN KEY REGIONS JUST EAT operates across 13 countries Region Country Launch Built vs. bought Market position¹ UK Mar-06 #1 of 6 Denmark Aug-01 #1 of 3 France (JV) Dec-11 #2 of 5 Spain Nov-10 / #1 of 3 Europe Ireland Apr-08 #1 of 4 Switzerland Apr-11 #1 of 4 Italy May-11 / #2 of 4 Norway Dec-09 #1 of 3 Netherlands / Belgium (Flemish) Jul-07 / Apr-09 #2 of 2 / #2 of 2 Americas Canada Aug-09 #1 of 2 2 Brazil Aug-11 / #1 of 4 Asia India (JV) Jan-11 #2 of 3 Source: Google A naly tics, JUST EAT Note: C ountries in bold font indicate JUST EA T s key markets. ¹ Market position based on Google A naly tics for selected competitors in the market for the period from Jan-2013 to Jan C anada excludes three restaurant chains and they are ahead of JUST EA T market position. 11

13 SIGNIFICANT OPPORTUNITY FOR GROWTH ACROSS GEOGRAPHIC FOOTPRINT JUST EAT s modest market penetration presents significant headroom for robust growth potential UK Denmark Other key JUST EAT countries 1 Overall Takeaway Delivery Market size 2 ( bn) Potential JUST EAT % share at scale 3 45%+ 55%+ 30%+ Commission rate (as at Jan-2014) Implied JUST EAT commission revenue at scale ( m) commission revenue ( m) 12.0% 10.0% 10.1% commission revenue penetration (%) 22% 69% 6% Source: Market size as per Callcredit Report and rest as per JUST EAT Note: C ommission rate above is based on Jan-2014, whereas commission revenue is based on FY O ther countries consist of Canada, France, Ireland and Spain. Commission rate represents an average of the relevant markets. 2 Market size as per Callcredit Report. 3 Management s strategy is to target a 45% market penetration in the UK and 30% in other key countries as per its mature Danish market. There is no certainty that this penetration target will be achieved or in w hat timeframe. 4 C alculated by multiplying market size by target market share and commission rate. This revenue figure is illustrative only and is based on a target market share which may not be achieved. 12

14 UNTAPPED OPPORTUNITY FOR TAKEAWAY COLLECTION Expand addressable market by allowing takeaway food collection in addition to delivery Size of takeaway collection market TRs (in 000) TRs on JUST EAT Platform (in 000) Order for collection represents another potential large and untapped market for JUST EAT Half as big again as delivery 52% 64% 76% 61% Expand network to restaurants not offering delivery services 48% 22% 36% 24% 11% 6% 39% 28% Collection market potential has increased on the back of smartphone penetration Scale of opportunity growing with increasing popularity of JUST EAT mobile app UK Canada Source: Market size as per C allcredit Report; JUST EA T Note: TRs on JUST EA T platform as of 31-Dec-2013 France Denmark Delivery TRs Collection Only TRs TRs on JUST EAT Platform 13

15 POTENTIAL ACCRETIVE IN-MARKET AND OUT-OF-MARKET M&A Available resources through a combination of cash on balance sheet and 100m of primary proceeds for in-market and out-of-market M&A opportunities In-market M&A Consolidate in-market position by acquiring complementary businesses Focus on markets with significant scale Out-ofmarket M&A Enter new countries through acquisition of market leaders of scale Drive performance through implementation of proven business model, technology, know-how and best practices Capacity and resources Proven track record of acquiring and integrating 11 acquisitions in last 3 years Available resources through a combination of cash on balance sheet and 100m of primary proceeds before any leverage that the business can support Note: C ountries highlighted in the map represents JUST EAT existing operations. 14

16 HIGH GROWTH BUSINESS MODEL Substantial growth in JUST EAT orders translates into robust top line expansion TRs (000) Active Accounts (m) Orders (m) Revenue ( m) with growing margins and strong cash flow generation UK DK Underlying EBITDA ( m) and margin (%) 22.5% 35.8% 33.4% 40.4% 37.1% 40.3% Free Cash Flow ( m) % % 3.8% % cash conversion 2 276% 109% Source: JUST EA T Note: Group rev enue and Underly ing EBITDA differ from the sum of the contribution from the three reported regions due to consolidation adjustments (e.g. inter-segment sales, share of equity accounted JV and head office costs) 1. F ree C ash F low defined as Underly ing EBITDA + net change in w orking capital capex taxes others 2. % of Underly ing EBITDA 15

17 INCREASE IN COMMISSION RATE AND ARPO Average commission rate (% of transaction value) ARPO ( ) In the UK, commission rate increased to 12.0% in Jan % 10.8% 11.0% 9.4% 9.0% 8.8% 10.5% 10.2% 9.4% UK Denmark Other UK Denmark Other Source: JUST EA T Note: In Denmark, historically low er rate due to annual subscription fee charged to restaurants. Danish headline commission rate increased to 10.0% in Sep

18 SIGNIFICANT REVENUE GROWTH Contribution to revenue growth By Revenue Driver ( m) By Region ( m) Y-o-Y growth: 67.1% 18.3% 34.4% 140.5% Y-o-Y growth: 67.4% 15.8% 88.6% Order-driven Connection Topplacement Other UK Denmark Other 2013 Source: JUST EA T 17

19 GROWTH AND PROFITABILITY IN THE UK AND DENMARK Revenue ( m) Underlying EBITDA ( m) Denmark UK Denmark UK Revenue growth Underlying EBITDA growth Underlying EBITDA margin CAGR CAGR Denmark 13% 16% 14% 27% 15% 21% 36% 40% 40% UK 92% 67% 79% 186% 86% 130% 22% 33% 37% Source: JUST EA T Note: numbers are based on statutory accounts/management estimates and not under IF RS. 1 C A GR for

20 GROUP SUMMARY FINANCIALS (Dec year end) ( m) Total transaction value (est.) UK DK Other Total TTV Revenue UK DK Other Total Revenue YoY Growth % % Underlying EBITDA UK DK Other Group Costs (6.3) (1.4) (13.1) (2.2) (11.8) (4.8) Total Underlying EBITDA Underlying EBITDA Margin % % Source: JUST EA T Note: A ll central costs directly related to running each country hav e been allocated so that the country Underly ing EBITDA figures represent the full cost of operation and only those costs related to pure group functions remain in Group C osts. 19

21 FINANCIAL TAKEAWAYS Strong underlying growth in consumers, TRs and orders Proven ability to increase monetisation of platform (e.g. commission rates, sign-up fees, advertising) Significant profitability achieved in the Denmark and UK Currently investing in other growth regions Demonstrated scalability of business model Highly cash generative 20

22 INVESTMENT HIGHLIGHTS Strong position in attractive market Large and growing addressable market Clear market leading positions in key regions supported by compelling network effects Clear competitive advantages Strong online presence and brand driving low cost per active account Robust and active relationships with takeaway restaurants Efficient, established and scalable technology platform Strong growth opportunities Significant opportunity for growth across geographic footprint Largely untapped opportunity for takeaway collection Potential accretive in-market and out-of-market M&A Superior execution Strong track record of growth and profitability in the UK and Denmark Strong cash conversation Experienced management team 21

23 SUMMARY Clear leadership position in the UK and Denmark Proven high margin and profitability Highly attractive cash conversion Significant runway in existing markets Further growth opportunities 22

24 APPENDIX 23

25 MANAGEMENT BIOGRAPHIES David Buttress Group CEO David joined JUST EAT in March 2006 He has led the UK business from launch Appointed CEO in January 2013 following his roles of Chief Commercial Offer and former UK Managing Director Started his career with Coca-Cola Enterprises in 1998, during which time he had a variety of senior sales roles Won the Account Manager of the Year award when he was managing the key national restaurant customers in the UK for Coca-Cola Honours degree in Law & Business Mike Wroe Group CFO Mike joined JUST EAT in late 2008 and as CFO holds responsibility for Finance, Tax, Legal, HR, Property and Administration Appointed as a director in 2013 Prior to JUST EAT, Mike served as CFO at both Nexagent and Innovision R&T and was involved in its IPO in 2001 Mike has over 20 years commercial / Finance Director experience having qualified in 1993 with Deloitte Joint Honours Degree in Chemistry and Management from The University of Nottingham Adrian Blair COO Adrian joined JUST EAT in 2011 Leads all country teams globally across sales, marketing, operations and customer care, running the Group s operations in the UK, Brazil, Canada, France, Denmark, Netherlands, Spain, Italy, Ireland, Belgium, Norway and Switzerland Previously worked at Spotify as Director of European Business Development and at Google in a variety of senior management roles in California and London Taught undergraduate Economics at Harvard University and was part of the executive team at Ask Jeeves MBA from Harvard Business School and a BA from Oxford University 24

26 MANAGEMENT BIOGRAPHIES Carlos Morgado CTO Daniel Read CPO Carlos joined JUST EAT in July 2009 to head Technology function Previously he acted as a consultant for several companies in the social media, mobile, and online dating spaces Spent a number of years at AOL, growing the Technology team from a maintenance role to become an integral part of the business, delivering and operating business-to consumer and business-to-business applications Worked for a number of start-ups marrying his experience of the internet and mainframe technologies to bring web research tools to the executive desktop PhD in Physics from the University of Bristol Daniel joined JUST EAT in 2011 He is responsible for product vision and execution globally Previously Chief Product Officer at Ask.com, where he was tasked with driving product, user experience and innovation Founding member of the team at Ask Jeeves UK, and before this, created the first web and ecommerce operations at British Airways and Royal Mail Founder of product lab, Freeform, and an adviser to a number of consumer product and technology businesses Bachelor of Arts from Leeds Business School and Master Degree in Design from Central St Martins. He is also a Chartered Marketer Mat Braddy CMO Mat joined JUST EAT in 2009 and set about establishing the Company as the leading brand in delivery takeaway around the world Built a team of experts covering Retail, Brand and Digital marketing In 2012, led the global launch of Skylight s brand campaign to ban home cooking, Don t Cook, JUST EAT Previously worked for The Financial Times, toptable and gameplay.com 25

27 SCALABLE BUSINESS MODEL m CAGR Revenue % Cost of sales (net) (3.2) (5.1) (10.0) 77.9% % of Revenue 9.3% 8.5% 10.3% Gross Profit % Gross Margin 90.7% 91.5% 89.7% Salaries (16.0) (25.4) (38.0) 54.0% % of Revenue 47.4% 42.6% 39.2% Marketing (7.8) (15.3) (23.4) 73.4% % of Revenue 23.1% 25.6% 24.2% Overhead Costs (6.5) (11.5) (11.7) 34.4% % of Revenue 19.2% 19.3% 12.1% Total Admin Costs (30.3) (52.3) (73.1) 55.4% % of Revenue 89.7% 87.5% 75.6% of which Central Costs (1.4) (2.2) (4.8) Joint Ventures (0.2) (0.2) 0.4 Underlying EBITDA ,095.1% % Growth % Underlying EBITDA Margin 0.3% 3.8% 14.5% Depreciation (1.1) (1.8) (2.8) Amortisation (0.2) (0.8) (1.3) Underlying EBIT (1.2) (0.3) % Growth % - Underlying EBIT Margin (3.4)% (0.5)% 10.3% Source: JUST EA T 26

28 Thousands LIMITED SEASONALITY Change in monthly orders driven by number of factors including number of weekends, bank holidays, new year resolutions, and weather Monthly orders (UK) 3.5m 3.0m Unusually hot July 2.5m 2.0m 1.5m 1.0m Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Q1 79.5% YoY growth Q2 70.6% YoY growth Q3 67.7% YoY growth Q4 66.2% YoY growth Source: JUST EA T H1 44.6% contribution H2 55.4% contribution 27

29 REVENUE GROWTH ( ) Contribution to revenue growth By Revenue Driver ( m) By Region ( m) Y-o-Y growth: 84.6% 57.1% 65.8% Y-o-Y growth: 92.1% 12.9% 145.6% (0.5) Order-driven Connection Topplacement Source: JUST EA T Other UK Denmark Other

30 KEY ORDER DRIVEN METRICS UK ARPO % Growth % - 4.7% 2.4% No. of orders m % Growth % % 70.3% Order Driven revenue m % Growth % % 74.3% Denmark ARPO % Growth % - 3.9% 8.5% No. of orders m % Growth % % 8.1% Order Driven revenue m % Growth % % 17.3% Other ARPO % Growth % - (15.5)% 15.7% No. of orders m % Growth % % 59.5% Order Driven revenue m % Growth % % 84.6% Source: JUST EA T 29

31 CONNECTION AND PLACEMENT FEE REVENUE Connection fee revenue ( m) Placement fee revenue ( m) YoY Growth (%) Total: Other: Denmark: 65.8% 4,173.3% 31.0% 34.4% 136.1% 31.3% 5.0 UK: 71.4% 27.0% Source: JUST EA T UK Denmark Other 30

32 UNDERLYING EBITDA GROWTH IN ESTABLISHED GEOGRAPHIES AND INVESTMENT IN OTHER REGIONS Contribution to Underlying EBITDA growth ( m) 9.8m for established countries 12.4m for established markets (2.6) (6.9) 0.1 (0.8) 2.3 Underlying EBITDA 2011 UK Denmark Other Share of Results of JVs Head Office Costs Underlying EBITDA 2012 UK Denmark Other Share of Results of JVs Head Office Costs Underlying EBITDA 2013 % contribution: 409% 40% (315)% 2% (37)% 100% 5% 12% 5% (22)% Source: JUST EA T 31

33 STRONG CASH CONVERSION Underlying EBITDA to free cash flow bridge (2013) (3.9) (4.2) (2.3) 15.3 Underlying EBITDA Net Change in Working Capital Capex Taxes Others² Free Cash Flow¹ 14.6% margin 31% change in revenue 4.0% of revenue 33.6% tax rate 108.5% conversion Attractive Underlying EBITDA margins Favourable working capital dynamics Low capex requirements Optimise tax paid High cash conversion ¹ F ree C ash F low defined as Underly ing EBITDA + net change in w orking capital capex taxes others. ² O ther includes IPO costs, acquisition related expenses, results of JV and associates, loss on disposal of PPE and other non-cash items. 32

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