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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning everybody, and welcome again this time to talk about Allegro Q4 2021 financial results. Our hosts today are the CEO of Allegro Group, Francois Nuyts.
Hello.
Our CFO, Jonathan Eastick.
Good morning.
And my name is Michal Kuzawinski, and you should know me already. Let me begin with a few organizational comments before we move on to our results.
Firstly, our results presentation is available for download from our IR webpage at allegro.eu. Please ensure you review the disclaimer on Slide 2 of this presentation, and in particular, the comments about forward-looking statements contained in the presentation.
Secondly, we will have a Q&A session after the main part of the presentation. [Operator Instructions]
And finally, please note that this call, including the Q&A session, is being recorded, and a replay will be available on our website at allegro.eu. Over to you, Francois.
Thank you, Michal, Jon. So let me start first by welcoming you all to this call, and obviously, today is a bit of a weird day in 2 dimensions. First and foremost, what is happening in Ukraine. As you all know, Ukraine is our neighbors, and we have plenty of Ukrainian as minority as our neighbors. So as Allegro, as a caring company, will obviously pivot to what is it that we can do to help, but I cannot start this call without mentioning this.
The other slightly different news, obviously, that you probably have seen is the announcement of, you say, the start of the succession plan for me. And here, to be clear, this is just the beginning. Meaning, we really want to have a world-class succession. But that means we're announcing it way early to make sure that we can, how do you say, it's loud and we can, how you say, get the best, best candidates. So the company, Allegro, which has so many things ahead can go from high to height. And what that means for the foreseeable future, I'm in the helm with the rest of the management team, the great new members that has joined about the last year and months, and we have so much stuff to go through this year. Actually, great impact for fund stuff that will carry on to invest until at some stage, probably towards the late part of the year, we find an amazing successor. So I'm sure there will be questions on this, but let's move to the business itself.
So let's talk about Allegro. The 2021, again, was a bit of a weird year. We, had all hoped that COVID would be a past. It obviously wasn't the case. Hopefully, 2022 will be the year where we put COVID behind. And when you translate it to, if you recall, in 2020, we grew by a whopping 54%, much faster than most pocket places at that stage of maturity across the world.
One of the reasons for that is our marketplace. Our MFN network, scales much better than anything we've seen. And despite this growth in 2020, in 2021, we managed to grow much faster, not that the -- sorry, that the at 54%, but we managed to add a 21% growth on top. This achieves a remarkable CAGR of 37%.
Now, what are the drivers, the recurrent drivers that are the things that the team work on day in day out at Allegro. First is, how we managed to increase the choice available to our consumers. We increased it to PLN 250 million, 25%. You do the math, the number of offers we add on a daily basis is just mind blowing.
Now a little bit more unusual for a marketplace, the way we manage to do everyday low price and marketplace environment continues to improve. When we launched the program Allegro Ceny, for example, we now have over 100,000 sellers participating in the program, which means we not only can match on the short tail, which is usual for 1P, we can match on the long tail of the product across multiple competitors. And we know that in Poland, it's so important.
In terms of delivery experience, the parcel that gets delivered faster, more predictably, again, in our MFN networks keep on improving, and we'll cover that in a little bit detail in a minute.
And a source of pride for Smart! program, which is a little over 3 years old now, has now reached 5 million Smart! users. And that's paramount because that's a key sign of the progress Allegro is making in winning the hearts and minds, right? You only join Smart! if you know that your next purchases are very likely to be in Allegro because we're selection, price, delivery competitive.
We're also lending a number -- launching a number of seeds, not really the correct English, but Jon will forgive me, in a sense of Allegro Pay. If you recall at the same time last year, we were just wrapping up the pilot, right? And we were saying, hey, there is a massive opportunity here. It's incredibly easy for consumers to use. We're now way past this. We actually surpassed our expectations for the year, and it's really the seed of a number of other fine fintech products that will come up in the following periods.
The B2B platform continues to overperform the overall business, and that's great because that's another massive entitlement for us ahead. And obviously, international expansion, but that one I'll cover in a minute.
Within this, we managed to create from that GMV growth, what I'd love to call massive EBITDA [Indiscernible] That's our ability to keep on investing in the business and the long-term growth of the business, whether it's in speeding up delivery, whether it's launching new initiatives around fintech, but we'll cover that again in the presentation.
So without further ado, why don't we start the presentation. So if somebody can show the slides? Thanks.
So obviously, this is kind of the source of pride. A number of the teams have been working on this for quite a while, the launch of our first iteration of the international platform. Those of us here that are deep into the tech engine, it's having a -- a one country, allegro.pl versus having a multi-country requires actually a lot of platform work, and there's been a lot of investment from all the teams to make that happen. So that's the first situation where you can flex the shipping countries to all of Europe. You can ship that flex to euro, you can flex to English. The reason we started with English is, as a French man, it costs me to say, but if you get the Polish to English node with a high level of accuracy, your ability to get Polish to other languages is much higher. That's something Jon is pleased about. For me, this one, so-so, but it technically makes sense. That's the most important.
So moving to -- so the disclaimer, obviously, but our agenda, and presentation ahead. It's a little bit of a different presentation versus usual quarter results in the sense, as usual, I present highlights. Jon will cover financial results, then we'll go and see a little bit how the business stretches. So Jon will cover financial outlook and I'll cover development plans. As Michal noted, we'll do live Q&A, which was one of your feedbacks.
So starting with the Q4 2021 highlights, you can see that despite lockdown lapping, right in 2021 -- 2020, sorry, there were a lockdown in November. There was no lockdown in 2021. We managed to sequentially grow the business and accelerate the CAGR that -- the CAGR we care about, the 2-year CAGR because that's our way to smooth our understanding of the business outside of those lockdown [Indiscernible]. We managed to do this because the number of active buyers grew, which is quite impressive versus a period where there was lockdown a year back. And if you continue through the funnel at the improvement in terms of number of subscribers, number of users is quite impressive. One of the key metric we take special pride in is the number of loyal Smart! consumers, which reached over 5 million. What else can I cover here that I haven't covered? The financial results, obviously at 21% revenue plus 34%, EBITDA 18%. We'll talk about the targeted investments we're making to grow the business in the following quarter. And obviously, the launch of international and the acquisition of Mall pending the regulatory approval now only pending in Poland.
So here, as usual, on Slide 5, I will not cover this. This is more for you to have one place to get the key data of the business as you look through the deck.
So let's talk a little bit about how our marketplace works. And I've covered some of it, so I won't cover all of it. But really, the core of the marketplace remains our MFN network, overwhelmingly so. And our ability to make that MFN network work at total scale on selection it normally does, right? That's not in specific to Allegro. And MFN network adds selection through the hundreds thousands of sellers much better than anything else. But what we proved time and time again is our ability to do the things that normally a 1P engine does better or heavy fulfillments a network does better. Our ability to do it in a network basis at least, as well. And I mentioned we now have 100,000 -- way over 100,000 of seller in our price nudges, which means we can be competitive not only on the front like a 1P does, but on the whole catalog at much better economics.
And obviously, the way we do delivery by deeper integration with the merchants, incentivizes them through sales and nudges massively uptick, I think, it's 7 percentage points quarter-to-quarter. And one thing that I know was I dreaming of launching from at least a day I arrived, which was shortly before the Christmas season. Our ability to, for example tell customers, hey, order it today, get it by Christmas, which was amassing the help for consumers during the shopping season and drove incremental sales. Overall, the telling side is also the NPS that we do this. At 91%, it compares excellently with more asset incentive solutions.
So let's talk about Smart! and Allegro Pay. So as I was saying, Smart! is amazing because it covers the whole, not the whole, but the overwhelming size of our selection. We don't need to have it in-stock to be able to offer it within Smart!, free shipping and at speedy delivery, so it scales amazingly well, and that's what we're able to sustain it at that price point, and we'll cover the economics in a second.
And we keep on improving Smart! right? We improved the MOV on courier, and we'll talk about the impact in a bit, and we added Allegro Pay benefits within Smart! Allegro Pay continues to grow amazingly well, and again, here, the acquisition that we did now probably about a couple of years ago, which was that FinAi, which we've added, obviously. Our Allegro team is really scaling off fantastically well in terms of developing that new seeds of fintech across the business.
So let's pause a little bit on Smart! economics because I know we currently -- Jon and I covered that question. And here, we always look at it in terms of cohort. So if you're a cohort of consumer that joins in year 1, how does your propensity to buy more over a 2-year period goes? And here you see that as you join as a consumer, your propensity to buy more is 84%. That's why Smart! is so interesting. They got a great deal, but also Allegro and its merchants get a great uplift in terms of sales.
Because the way Smart! is structured, it's actually direct contribution -- contributed by 30%. So that's why the more, you say, consumers join Smart!, it's obviously, notably at the beginning, it has an EBITDA percentage dilution, but it's EBITDA absolute contributive, which is our key goal recurrently.
And we're still -- I know we're at PLN 5 million, but I'd love to say even internally that we're still at the beginning, right? We know that a benchmark of about 50% of Polish households is reachable and it's something we need to work on by keeping convincing more people to try, and we know that when they try, they keep it. So here, one of the things I know the whole leadership of Allegro from leadership team to Board is very proud of is Allegro, internally, we call it intense, but caring organization, but how much we care about not only our employee experience and our impact on the environment and then the wider society.
So here, a couple of things I wanted to call out is, first, we released our first -- our first international standard ESG report. We obviously have had ESG reports recurrently, but this is the first one that we use during international standard. We also were one of the first Polish companies to join the -- sorry, I need to get the acronym right. The UN Global Compact, and then also entered into science-based targets where over the next 24 months, we'll submit our contribution to reducing emissions in line with the Paris agreement.
And this is really the top of the iceberg. There's so many things that teams do on a daily basis to have a positive impact, which is something of pride and also allows us to recruit more people at that care.
Now within further ado when talking about caring, Jon. Up to you.
Okay. Thank you. You already moved the slide. Okay. Got it. Okay, So hello, everyone, and welcome to the presentation again. As usual, I'm going to take you through the financials and some of the key KPIs. But let me start with the -- what's happened over the year and in the quarter around our GMV, with buyers and spending.
If you were to think back to the beginning of 2021, the great uncertainty for Allegro, just like any other e-commerce business, was to what extent would all that extra demand that ran through the system, because of the lockdowns in 2020, be sticky and stay with the businesses during the course of 2021. I'm happy to say that a huge amount of that demand has stuck with Allegro, that the customers have really enjoyed the experience that they had when they came to Allegro for the first time for all the reasons that Francois has been describing, and that demand has stayed with us. And in addition, we've been able to grow that 21.2% GMV over the course of the year because we continue to invest very strongly in the inputs of the business and the quality of the offer. It's the retail basics. It's a Smart! expansion. It's what we offer within the scope of Smart! And the big win for the year, obviously, was the scale-up of Allegro Pay and the benefit that's been bringing on the top line.
So you can see it in the KPIs here in that we've been able to retain and actually grow our customer base up to 13.5 million about 3% year-on-year. And even more importantly, on the spend per buyer side, all those factors that I just mentioned, that translates into 18% year-on-year growth. We're at PLN 3,158 per buyer on an annualized basis as of the fourth quarter, and you can see acceleration in the Q-on-Q growth rates in that metric.
So putting it together and looking at the GMV performance, I already mentioned the full year. 16.7% growth in the fourth quarter, with the CAGR actually accelerating to 35.6%. This is achieved despite the lapping of a pretty severe lockdown back in November of 2020, back at the time when people weren't vaccinated, had a big impact on people moving their demand online.
And this year, one of the main things apart from the factors I already mentioned in the Q4 performance was absolutely excellent execution across the various shopping holidays and seasons. We had the Smart! Week at the beginning of the quarter. We had a Black Week at the end of November, then we obviously had a Christmas season which we managed to extend with that ready for Christmas note by several days, and that helps us as well with our GMV growth.
So PLN 12.7 billion of GMV in Q4, PLN 42.6 billion of GMV for the group for the full year.
When it comes to revenue, the trends are very much as you're used to, and outperforming GMV growth quite considerably, mainly behind growth in advertising. You can see advertising has moved on the right-hand side there to 9.6% of the total revenue mix. It's also up to over 1.2 percentage points of GMV as of the fourth quarter.
Looking at the revenue bridge, in particular, for Q4. The major driver here has been obviously the marketplace, a combination of that GMV growth and the take rate being up on an average for the year of 0.96 percentage points. It's about 0.4 percentage points for Q4 only because a lot of the monetization initiatives that we started around the middle of 2020 and concluded in Q1 of 2021 with the co-financing for lockers, a lot of that has now been lapped. And therefore, the take rate increase in Q4 was about 0.4 percentage points.
The decline in the take rate was something that we've been flagging to you since the very beginning of the year as those initiatives get lapped, and also because of the seasonality that we traditionally see in the fourth quarter. So we finished the year with 9.84 percentage points of take rate.
So let's have a quick look at our EBITDA in the fourth quarter, which is unusual for us. It did dip a little bit compared to the prior year, but let's try and understand where that's coming from.
As Francois mentioned, the real lungs of our ability to grow this business is the GMV growth and the monetization initiatives that grow the take rate, and that drives the box that you see on the left-hand side there, so that's label take rate, which is providing the fuel for all the investment that we're doing to keep driving the business and growing the business into the future.
As I mentioned, most of that monetization impacts came early last year, whilst the take rate has been drifting down towards the end of the year.
When it comes to the investments, the investments have been more back-end loaded. Francois was already mentioning what we've done around courier and around Smart! Courier is now 19.6 percentage points of the delivery mix within Smart! which is one of the main reasons for the net cost of delivery driver being at PLN 157 million in that bridge. And in addition, we've obviously been investing steadily in growing the team and our ability to innovate across a whole range of projects. You saw the level of activity going on in Francois' part of the presentation earlier, across a whole range of different areas.
So that's driving the other SG&A costs. We do have, in Q1 of 2022, the co-financing kicking in that we delayed, we didn't do in the fourth quarter. We left it to the first quarter. If we had done it, that would have probably about PLN 40 million to our EBITDA performance already last year, and then I guess the EBITDA trend would have looked a little bit different, had we done that. But we're very customer-centric in the way we approach things. The full year, taking the full year view and taking it holistically. The most important thing here, obviously, is we have grown the EBITDA sequentially within the guidance that we set at the beginning of the year at 18.2%. That sequential growth in EBITDA year-to-year-to-year is one of our key financial metrics when we're trying to plan the business. If you think back to 2019, we were a PLN 1.3 billion EBITDA business. As you'll see when I get to the expectations, we're targeting to add over PLN 1 billion to that number by the end of 2022 with more sequential growth to come.
And just to recap, the monetization came at the beginning of the year. The investments have been going through sequentially, and we'll get back to that year-on-year growth trend very soon. So this slide is just one of our standard ones. I won't dwell on it. You just have the history for the adjusted EBITDA.
And this slide, likewise, a standard one. I'm more than happy to answer questions on items between adjusted EBITDA and net profit. The only thing to call out here, net profit up 160% year-on-year to PLN 1.1 billion. I think, a very impressive net profit number.
When it comes to capital investment, we're investing strongly in the future growth of the business just as we are on the commercial side. The spend is up 76.6% year-on-year as we invest in the platform with all those innovations, including being able to internationalize, but also in our big DEX projects around the APM network rollout and also the first fulfillment center. But the total spending amounts to PLN 407 million for the year, and that is only -- that's still cash conversion of 80% of EBITDA and 7.6% of revenue, so it's still very comfortable spending for us.
And we're really very carefully managing what we're spending. We were able to achieve our financial objectives and guidance even though we underspent on CapEx, and this is because we're very carefully managing the CapEx investments. And on these new projects that we're running, we're being very careful to go step-by-step, milestone by milestone, to make sure that the gains that we're looking for are coming through before we go to the next stage of investment, and make sure that we maximize the potential ROI of these projects. So we're managing the CapEx quite cautiously as we move forward.
When it comes to the leverage position, we ended the year at just under 1.8x of leverage with nearly PLN 2 billion on the balance sheet. The most important thing is to call out, first of all, is you heard about the project and the partnership with AION to take the installment loans that we initiate with Allegro Pay off balance sheet. That is now operational. We received PLN 180 million in the first tranche of the loans that we sold during the fourth quarter, so the money is back in our bank account. We don't have those receivables on the balance sheet. The ROI of the whole project, Allegro Pay, goes up significantly as a result. We only fund the Buy Now, Pay Later loans.
When it comes to the Mall acquisition, we've now got it fully funded. We're ready to pull the trigger whenever we get the approval from the remaining -- the remaining Polish Competition Authority approval. We have all the funding we need to close the transaction. It's also hedged in terms of foreign currency exposure. We've also managed to increase our revolving credit facilities to PLN 1 billion. We're planning to do a bond issue, which we will use to refinance the bridge loan that we have as part of the Mall finance. So lots going on, on the treasury side.
Okay, and that brings me to the last slide of this section before I hand back to Francois, which is obviously the expectations for 2022.
As we're covering it on this slide, I'll just reiterate that we made our guidance across GMV revenue and adjusted EBITDA. We underspent on CapEx due to the way we're managing it very carefully that I just described. When I turn to the 2022 expectations, the numbers, you'll notice that actually quite similar to what we were guiding for 2021. I also want to point out, these numbers are the Polish business -- the Polish continuing business. They do not include Mall. We don't know exactly when we're going to make the acquisition, so it's extremely difficult to estimate what the impact would be on a full year basis.
So let's start with the GMV. As I said, similar to this year, we're expecting high teens to low 20s growth. We're assuming that month-over-month, the impact of COVID is going to recede. We're not expecting any more lockdowns. We think, therefore, that the usual pattern of a secular tailwind for e-commerce growing much faster than what is a pretty strongly growing retail, general retail sector in Poland, will continue through the year. When you combine that with the growth engines that we have and the input drivers that we have across retail basics, Smart!, Allegro Pay, et cetera, we're confident that we can hit this kind of growth. That then obviously feeds through into revenue over-indexing mainly through advertising, but also because of contributions coming in from the DEX projects now that they've actually launched commercially.
When it comes to the adjusted EBITDA, we're looking at low to mid-teens growth year-on-year, so again, sequential EBITDA growth, which is one of our financial priorities. In this case, not so much going on the take rate as there was a year ago, but the co-financing has been initiated on the first of February. There's a few improvements in take rate that are planned for the near future that you'll also start to see impacting numbers very soon.
In terms of headwind, the main one that we have to negotiate is the move from start-up phase of the DEX projects into the scale-up phase where the start-up losses are much more significant. Incrementally, that's going to be about PLN 60 million drag that you need to reflect in the EBITDA number.
When it comes to capital investment, we'll be pulling the amount of APMs we're deploying to around 2,000, bringing the total to 3,000. Growing the tech team, growing significant investment in the platform, so that's also driving a part of that number. We also have the remainder of the automation phase of the first fulfillment center to complete in 2022, and we also have the remainder of the office rollouts that we're doing. Our 2 new head offices in Poznan and Warsaw are still being developed more slowly because we're still in an out-of-office mode.
So with that, I'll pass back to Francois who's going to take you through some of the strategic levers that we're developing over the next few years.
Thank you, Jon.
And always when talking about the strategic levers, the first and foremost is how do we continue to scale that merchant-fulfilled network. I'm not going to cover in through all the details, it's more for you to have an idea of the different levers we are going.
What that means is the vast majority of the PLN 100 billion aspiration objectives that we have will still be on an MFA network because, again, it scales so much better in selection. And we're proving quite unique through our tech team, our product team that we can do all the other things, whether it's competitive pricing, competitive delivery within this network, and that's something that scales extremely well and also a key tool for international.
Now, it's not to say, as I've said many times, that we will not do targeted asset investment where it either helps us with consumer experience, improving delivery speed, for example, with international sellers, or give us optionality in terms of driving costs down. So obviously here, the 2 example is, one fulfillment. And the other one is APMs.
In terms of fulfillment, as Jon has mentioned, we're doing targeted investments, improving our fulfillment model. And what that means, what is the revenue increment -- the GMV incrementality from the spinning up of international sellers, and obviously, the EBITDA contribution from that model.
The APN network, again, Jon said will roll out 3,000. Keep in mind here, we're very consistent, what we're optimizing for over time is the reduction of the cost of delivery whether it's through our own network or other third-party network. And obviously, the deep integration in terms of user experience with the Allegro platform. And those things are going well according to plan, thanks to the amazing teams that we've created, and that creates multiple optionalities looking forward also.
Now, looking at Allegro Pay and Financial Services, I think I've covered that before, so I'll be fast. This is really, a little, -- not little anymore, a great gem, but still at the very beginning of the journey, the teams that we created and the progress on Allegro Pay is just astounding, but it's just one product. That one product is actually amazingly accretive both in terms of GMV and in terms of ROI, but you'll see other products coming up from that team over the period. And the kind of consumer-facing design that the team comes up with the top of 92.8 NPS which is through the roof is really a credit to our ability to develop sequential new products in fintech.
So obviously, we have big goals in terms of international. And if you recall, a couple of years ago, we started with making our platform international centers-friendly, and you heard me say many times, we don't have a business going international if we're not able to have an inbound funnel for international centers, so that works very well.
The next steps, obviously, was about helping more consumers able to discover the platform, so that was the project around of export shipments that we closed, I think, sometime mid-year. And last year, and we can see the progress in the number of offers that are eligible for export is astonishing. But now it's about translating the platform to other languages, shipment destination, currencies and as you've seen in the first half. And obviously, I couldn't stop on international without mentioning the Mall Group acquisition. Obviously, Mall covered the financial part of it. But here, it's amazing to see that the interaction between the 2 teams is going very well. Obviously, we cannot integrate until we get regulatory clearance, which hopefully will come soon. We have most of the regulatory clearance, we still have one to go in Poland. But the level of interaction between the 2 teams is really promising in terms of what it promises to deliver.
And I want to restress, there is no one-stop shop in the countries where Mall is, so our -- the combination of the Mall customer base, the Mall's know-how and our deep expertise in merchant fulfill network is really something promising.
So that's my cue to hand it back to Jon in terms of long-term guidance.
Yes, exactly. Thank you very much, Francois.
So unusually, I have the final slide of the presentation before we hand back to Q&A because we've been working hard on our medium-term plan and being able to share with you an updated medium-term expectations today at this meeting. And we've been building on all those themes that Francois was just describing in putting this plan together. So this is how we see 2023 through to 2026, assuming, obviously, 2022 expectations as a lead in. In this case, we're including Mall using a pro forma 12-month set of numbers for Mall as a baseline in order to calculate the CAGRs that you see here. So the total is for the combined group with Mall. Right-hand column is the percentage point contribution to those CAGRs that we foresee from the Mall acquisition.
Okay. So that's the structure, and let me start with the GMV. So we expect the combined group should be able to grow in the low 20s over the -- over the projection period, with approximately 2 percentage points of that growth coming from Mall. Now the main drivers here, obviously, are the ones we know from the marketplace, so on the Polish side. So this is, in particular, the retail basics, continued expansion of Smart!, much bigger penetration of Allegro Pay over time. All of this is going to help us keep the growth plus the secular trend, obviously, with Poland being quite low on penetration relative to some of the more developed economies. So all of that underpins the Polish part.
On the Mall side, as we transform the business to have massive selection over the marketplace solution, we're expecting to be able to get between 30%, 40% CAGRs once we've deployed the Polish marketplace in the Mall countries. So that gets us a really strong GMV uplift.
In terms of revenue, the usual story in terms of revenue running faster than GMV growth in Poland, particularly driven by the advertising and the DEX coming into the mix over time. The overall -- so revenue in the high teens, it's being pulled down in the case of the Mall acquisition. Because, as you're aware, 90% of Mall [Indiscernible] not expecting to grow that nearly as fast as we're aiming to grow the marketplace part, which we're going to grow absolutely massively. So as a result of that, as it grows, as it transforms into a 3P business, we over-index in terms of growth impact on GMV and also on EBITDA. But on revenue, it's actually pulling down the average growth rate.
When it comes to adjusted EBITDA, we feel we can grow the business faster than GMV over the medium term, and we're looking to grow mid- to high 20s, with 3 to 4 points of that growth coming from the Mall integration and that transformation into being a marketplace. The rest is coming on the Polish marketplace business, the continued growth and penetration of advertising, which we're hoping that we can accelerate faster over the coming years, contribution from DEX going from being a headwind, costing us money in the start-up phase through to making us money in the longer term. More operational leverage across the combined organization of Allegro and Mall over time. All of that is going to help us with the EBITDA margin. Allegro Pay contributing strongly with a very high margin will also help. Smart! as well will become less significant as it matures as it gets towards the targets of penetration that Francois mentioned earlier.
CapEx wise, across the combined business with more investment index sequentially over time as the projects roll out, we think will be between PLN 1 billion and PLN 1.3 billion, some of that money being invested in fulfillment in the Mall regions. When you put all of that together in terms of free cash flow, you'll see that the free cash flow is growing strongly. We think that the leverage that will move up to about 3x when we acquire Mall later this year will probably be down in the region of 1x by 2025. So we think this is an exciting projection. It clearly takes us to being a PLN 100 billion GMV business and some -- quite some more, when you run the math, with improving GMV margins over time, heading in the direction of between 4% to 5% margins, around 4.5% over time. Low leverage, very strong free cash flow. We think it's a really exciting vision for the future.
So with that, I'm going to wrap up the presentation. I'll hand it back to Michal, and Francois and myself are here to take your questions.
Thank you, Jon.
Thank you, Jon. [Operator Instructions] Meanwhile, the first question is coming from Miriam from Morgan Stanley.
Great. Hope you can hear me. A few -- 3 questions from me. Firstly, just on your CapEx, so if I look at the FY '22 guidance that you gave actually last year, I think it was PLN 700 million to PLN 800 million range, and now the guidance is slightly below that, so despite the fact you're pushing some of your CapEx from last year into this year. So if you could just walk through what's changed with that? Or is it just as you say that you're being a bit more cautious on the spend there as you ramp up?
And then also if I look at your mid-term guidance of PLN 1 billion to PLN 1.3 billion, if I take out the sort of PLN 300 million guidance you've previously given for Mall Group, it does imply a bit of a step up for the core Allegro business. So if could you just talk a bit more about what incremental that you're investing there and perhaps just confirm split of that guidance between Allegro and Mall Group?
Secondly, sorry, I thought it's going to be a long one. Secondly, if you could just give a bit more color on just the investment cadence this year between 1H and 2H. Clearly, there's a big ramp-up in lockers, so should we expect that to be evenly split between 1H and 2H, or a bigger drag in any quarter?
And then thirdly, if you could just comment on the competitive environment. How does your selection compare to peers at the moment? Have you done any benchmarks on that? And what are you seeing in terms of price competition, marketing spend as well?
I'll do one line on the first part, and then I'll cover competition at the end.
There's some change that is keep in mind, what we're creating in terms of merchant fulfill network is quite unique, right? And we're learning as we progress, how well it scales. So when we did some forecast on the level of investments were needed, we were being conservative in a way in our ability to scale that MFM. What we keep on discovering is the ability of our product teams, our tech teams of creating deeper integration with the sellers that deliver that 1P experience under that merchant-fulfilled network umbrella gets better and better, so that gives us a bit of a better layout.
And then obviously, there are a number of more -- John? Yes.
Yes, let me take the other points. Yes. So it's a super questions that help me explain what exactly is in those numbers, so I appreciate that.
The 2 main factors, as you rightly pointed out there, that there is some spend that's moved over from 2021. Some of that is locker deployment because we were aiming for, what 1,500, we're a couple of months behind what we originally intended to do in 2021, but nothing important. It's scaling up really fast. Also, some of the office deployment as well, that's moved into the current year.
The most important difference is that on fulfillment, we're still in the process of getting the first fulfillment center really humming and really operational. We still have to finish, in particular, the automation phase, which really scales up the capacity of the facility. And we decided that whilst we still have this on our plates, it doesn't make sense to pull the trigger and start the next fulfillment facilities until we really see how this one runs commercially and how it actually helps us with the goals that we're interested in which is, in particular, being able to do more next-day delivery, make a bit of money from the relationship with the merchants to test the demand, bringing the international sellers, right? So we want all that to be working before we do the next fulfillment center.
So compared to last year, there's a second fulfillment center is not in the guidance. The other important element is a big chunk of the spending, as it has been historically, is actually the capitalization of development costs, and this is basically the number of developers multiplied by the cost of developer and the great projects that they're working on to improve the innovative capacity and growth capacity of the business. We've been investing very heavily in the team, as was mentioned in the presentation. The cost of these people is going up quite significantly around Europe, they're very, very sought after people. But in the -- and that's a big element of the growth towards that PLN 1 billion spend that you were asking to understand.
On the other hand, over the longer term, we do see that there is a limit to how big we need that tech team to be, right? And I was mentioning that leverage is actually -- operational leverage is part of this story around how the EBITDA is going to start to move up. Part of that is that we will stabilize the size of that team. We just got a very experienced new colleague on the Board, David Roberts, who has got multi-year experience of running big tech teams. He was at Zalando until recently, and we think he's really going to get the best out of that organization.
And the last one was competition petition. And I think what's your question, Miriam, was around, do we benchmark? Of course, we do. We drive innovation, but as you all heard me multiple times say, we stay humble and benchmark.
In terms of whether it's Smart! acquisition, consumer acquisition, overall GMV penetration of total retail, penetration of online, we keep on gaining and that's a testament to our ability to increase selection, pricing, delivery and overall consumer experience.
I think you had a specific question in terms of selection. And here, the same hold true than in all the previous quarters. Our ability to remain the MFN network here is amazing because it allows us not only to get all the tail selection that the normal MFN does, but it also enables us to have those large retailers that you don't see in competitive 1P plus 3P, and they contribute unique selection, unique price points that are uniquely needed per country. And that's something that you've seen the numbers, right? We've added 1,000 brands. We have added large unique retailers such as Pepco, but really, here, we sequentially keep on adding, adding, adding in a way.
When you do some benchmark, the international selection, notably Chinese, obviously progresses well on Allegro and that's obviously a competitive tool versus AliExpress or Shopee and the high-end selection is already there. So it's something that we'll keep on monitoring, but so far, I think the number speaks for themselves.
Great. And then just one more on just the margin progression this year, how you're thinking about that between 1H, 2H. Is there any particular quarter where majority of investment...
It is margin progression, not the CapEx progression.
CapEx, but net margin probably.
Yes, yes. It's margin progression, EBITDA. .
Yes, yes.
Yes. So, yes.
The first quarter, if you recall, there was a lockdown -- quite an extensive lockdown in Q1 of 2021 which we have to negotiate, and that's going to keep the GMV growth below the high teens, low 20s that we're projecting for the full year at the beginning of the year. So the growth should start to accelerate once we get through Q1, and the monetization initiatives that we're introducing during the course of Q1 will obviously help a lot later in the year, yes.
So what that means is that you should expect a lower rate of year-on-year in the first quarter with quite a significant acceleration in year-on-year EBITDA growth from Q2 to Q4.
And Francois, in one of your replies you used expression MFN network. I think it would be worthwhile to remind our listeners what it means.
Merchant Fulfilled Network, right. Our ability to deeply integrate with merchants and give consumers an experience that is seamless, which is something that is really unique about Allegro in the way we develop tech-for-merchants to do that.
And the next question comes from Cesar Tiron from Bank of America.
Thanks for the call and the opportunity to ask questions. I have 3, if that's okay.
The first one, how do see your take rate evolving over time as there are a few moving parts, which you discussed, including the co-financing, but also maybe competition? Or another way to ask that question, do you expect marketplace revenue to grow at the same pace as GMV in 2022 or beyond, or should be a bit faster? So that's the first one.
The second one, what inflation have you included in your budget, at least for 2022? I think Polish inflation is very close to 10%. Have you assumed some kind of normalization on the cost side, maybe in 2023?
And then the third one would be if you can talk a little bit more on the cost side, mainly the delivery cost as a percentage of revenue which is the key costs, which increased the most over the past couple of years. Do you expect that cost to remain, which is mainly driven by Smart! obviously. Do you expect that cost to be broadly stable as a percentage of GMV going forward?
Mostly you, I think.
Let me do this. So the take rate, we are assuming that whilst we'll have that similar sort of pattern as we saw last year in terms of higher at the beginning and fading later in the year, it should stay higher on a quarter versus prior year quarter basis through the year. So we will add revenue -- marketplace revenue faster than GMV. Main elements being this co-financing, we've just done a few other elements around optimization, really, on different categories, as we've described in previous meetings.
The second question was about inflation. We are assuming, yes, that the inflation is going to work through into the selection that we're selling. Inflation in Poland right now is about 9.6%. Interest rates are moving up, but they're still down around -- the base rates are down around 3%, so there's still some room for that to change. But the Polish consumer seems to be very resilient. There have also been tax changes here, which move money into the pockets of the relatively, let's say, lower income segments, which generally results through the multiplier effect in a boost to demand. So we're reasonably comfortable on our projections for -- for the GMV growth.
Another factor is last year here, once everyone was getting -- once the vaccination really started, there weren't really any lockdowns after Q1 last year. And this year, we are assuming and hoping and keeping our fingers crossed that COVID isn't going to make a return in any really aggressive form, and that means we think that what we're used to in terms of penetration growth, and we were seeing prior to COVID, is going to return, and that's going to give us that tailwind in terms of buyers and in terms of -- in terms of spend, okay? So all of that is helping on the GMV side.
I think you were asking about 2023, yes, we are assuming it will slow down a bit. It would be part of the leverage that I was mentioning would be, that the rate of growth in salaries would be able to come down a bit because of lower inflation as we go forward.
And the final question was, I can't remember...
Yes. On the net cost of delivery. So obviously, that was the cost that increased the most as a percentage of revenue or GMV over the past couple of years. And so my question was to -- and driven by Smart! obviously. And my question was really to understand how do you see that cost item evolving over the past -- over the next couple of years?
That's a great question. And what we did in the third and fourth quarter, using the way -- Francois looks at the world from a customer-centric perspective, we fix some defects in the Smart! offer around courier. You couldn't always find a courier on an offer when you got to the point of buying the service. We fixed that now pretty much on 100% of offers. There's always a courier offer when you get to check out.
And secondly, we brought the MOV down to the same level as locker. I mean -- and we can't really go any further than that, right? I mean, that is now an end destination in terms of comparability of what we're offering on Locker versus courier. So that generated a big pulse of cost increase last year, especially at the back end of the year. As I mentioned, there's almost a 20% increase in courier in the mix. And eventually, we'll lap that as we get to the back end of 2022, and we shouldn't therefore be seeing these big increases in cost of revenue on that line going forward.
By making that change, one of the key things is it's made Smart! attractive to some of the holdout customers who really actually like courier relative to lockers, so that's going to help us with growth in the number of Smart! customers.
But as we move through the cohorts, and I mentioned this several times, right, with every new millions of Smart! users, the absolute amount of GMV baseline, if you could look at that Slide 8, the 100 in that calculation of incremental Smart! that amount of money is smaller, and therefore, the package costs that go with it is also smaller. And so as we get towards maturity, the impact of Smart! in the overall mix of revenue and costs will slow down. The slack in terms of growth is going to get picked up by Allegro Pay as we grow that as a percentage of GMV.
Just one thing. It's not only the customer -- some customers like courier, mostly they prefer a lockers when they have that option. But in some parts of the countries, you do not access to lockers, right? So our ability to go and attract consumers in parts of the countries where density is not quite enough to have a locker network is tremendously better, thanks to those product directions we did, which is fantastic. .
And the next is Pawel Szpigiel from mBank.
First of all, I want to have a follow-up over this topic of net cost of delivery. I mean, you probably saw that the use of couriers is progressing, and could you give me a little bit of comment on that? How do you foresee coming quarters related to that matter?
And the second part of the question is about lockers' network development. Have you already seen that this development is translating into your numbers? Can you guide us how lockers development could be visible or when could be visible in coming quarters?
So in terms of courier, what we tend to see is the stabilization, so there's a -- as Jon was covering, there is a correction from correcting a product defect. There are many offers that didn't have a courier option, obviously, if you make that courier option, some people will choose it notably in areas where there is no locker. And then consumers will then pivot. Consumers that have access to both will be pivot between the 2 now that they have a choice. Now we do see over time that kind of share of courier stabilizing.
In terms of lockers network, we're really at the beginning here, right? So we have an installed base of lockers. They work fantastically well. Now a little bit the product defect that we were talking about in terms of courier like how many sellers and how many offers qualify, right? So the team is working on this and the uptick is working massively, but we need to get that, what we call throughput, right? To make both the consumer happy. So they have the wide choice of selection, and we know how to do this. It's just there are a couple of steps -- technical steps to get there. And it also solves the economics, right, as you have higher throughput through those lockers.
But so far, in terms of what we've set to prove of the last half of last year was to create a super well integrated with our platform, locker network that is significantly contributive to not only capacity, the user experience, and the seller cost and also, over time, improve the economics that it saves us cost. That's the true goal. And here, I can say the team is like say, ticking into the boxes one by one. And as Jon said, at a moment, we're in headwind costs from these lockers, will move sequentially to a contribution, and all the tick box are being put well on track. We did have last year a little bit delay in the launch. That's normal when we do something innovative.
Yes. Okay. The second question will be about the marketing cost. We substantial increase in marketing costs in this last quarter, and I want to ask why is that in particular? Is this related to the TV and radio company that were pretty visible in Poland? And you put down in your presentation that this rise in marketing cost is related to -- should result in customers -- number of customers increase. But actually, the number of customers is pretty stable, so should I assume that we will see the result of this marketing spend increased in coming quarters?
So when it comes to spending marketing, we optimize for 2 things. The overwhelming majority spend on an ROI basis on PPC, right? And if we see opportunities have great ROI, to spend more marketing money, we do, and that drives -- it's more efficient in driving sales than consumer acquisition that part, because the overwhelming majority of those that see that already Allegro consumers given the show of voice that we have. But it still works.
On the other part, the other thing we optimize, you mentioned ATL, is obviously awareness of different products we do, right? When we create an amazing product, whether it's Smart!, whether it's Allegro Pay, we want to reduce the timeline between us launching the product and consumers being aware of it. So that's what you saw us doing some targeted investments to get that utilization of those products higher, normally towards the end of the year, why does it spike a little bit during the end of the year? It's really a basic retail, right? At Christmas, customers are more interested in shopping. So if you -- your opportunity to launch them and to have them discover new products is a bit higher at much better ROI.
You were also asking about active buyers here. So, yes, we do expect that the active buyers should start to look more normal than it did last year. But if you recall, if you go back a couple of years, 2020 was actually 3x faster in terms of active buyer additions than the overall trend pre-COVID, yes. So we don't -- we only need to go up a few hundred thousand customers during the course of 2022 to get back to a more typical trend that one would expect when you have increase in e-commerce penetration relative to the retail growth in general that we -- which is a more common normality.
So what Francois was describing, that certainly is going to be part of the initiatives that will feed through over time into getting our share of those active buyer growth.
Okay. And last question would be about markets -- e-commerce market evolution in Poland in last quarter. Of course, I want to figure out, is your market share decreasing or increasing? And in your guidance, please, could you give us underlying assumptions about the e-commerce market evolution in the coming years? Do you assume that you will defend your market share? Or do you assume any little decreases in your market share?
I'll start, and maybe you will be helpful on e-commerce, and I'll stay true to my deep conviction.
We don't compete in the e-commerce market share. We compete in the retail share, right? And there's still the level of penetration of e-commerce in Poland as such -- height to grow when you compare it to other countries within Europe, other countries in Asia. So really, our goal is not so much to convince an e-commerce shopper to come to us, they normally with us already. It's more to convince the offline shoppers to come with us, or the large majority of their spending that our current customers do still offline to do it with us. And that's why we do things such as selection, delivery, Smart!, Allegro Pay, and we see we're massively sequentially able to get to a higher share of wallet of total retail.
And across, I know there is some activity from competitors, some local, some international. And it's right, it provides consumers choice. It actually convinces more consumers to shop online, which we will ultimately benefit from primarily, and we see Allegro here keeping on gaining segment share of e-commerce. But again, the true lever for foreseeable future growth is the penetration of total e-commerce out of total retail. And here, there's such a [Indiscernible] still in Poland, that is...
Okay.
The next is Michal Potyra from UBS.
Can you hear me?
Yes, we can.
Yes, apologies, a little bit fighting with the infrastructure. I have a couple of questions, if I may, please, a little bit of technical ones.
So the first one would be about the 5 million subs in the Smart! so I'm just wondering how this is calculated? So for example, if there is a family subscription, do you incorporate all of that? Or are those just paid subscriptions? Those -- the 5 million number? So that would be the first question.
Yes, that's a great question. So the -- that 5 million comprises the subscription paying users. And also, as you know, we introduced last year in a tremendously successful Smart! and Start which is a kind of a feeder program into Smart! to try it where you 5 deliveries with no subscription that you can use over the course of 12 months, and you only get it once, right, on an account, you're not going to get it the second time. And the conversion into subscription-paying customers has been absolutely super on that proposal -- on the offer. So those 2 together make the 5 million.
When it comes to family, where subscription -- where people with subscription have moved into a family, that's counted so you can have more than one Smart! subscription in a family, although over time, probably they end up with one subscription. We haven't yet actually started trying to count the additional non-Smart! users that are signing up to the family, so that's not included yet in the Smart! numbers. We haven't actually decided how we're going to handle that yet. If we do it, we'll obviously restate in history...
My second question is about your take rate trajectory looking into 2022. As you mentioned, you made some monetization efforts like the co-finance and also some price changes. If you could give us some guidance, how do you expect the take rate to shape going forward?
Yes. As I said, we expect it will go higher year-on-year, but not in a comparable way to what we saw between 2020 and 2021. In that phase from the second half of 2020 through to the introduction of co-financing lockers at the beginning of Q1 last year, we added something like 100 basis points of the take rate when it went right away across 4 or 5 different initiatives.
This year, it's -- what we're planning is much less significant. Francois was mentioning earlier, we still have a lot of runway on Smart! in terms of the co-financing that we're collecting from the merchants. The merchants are getting tremendous volume increase from the fact that we have the free delivery on-site. They understand that. Last year, they were paying mid-teens out of the total cost of delivery. With what we're just introducing, that is going up just under 1/4 of the total cost.
On the take rate side, on the pure traditional take rate side of things, we're not moving it up very much. We are making a few targeted adjustments, corrections to help merchants make the right decisions that drive our economics well, but it's not going to translate into a massive increase in the headline take rate. So much less impact than last year.
Two more questions, please, if I may. Short ones, I promise.
So the first one, if I heard correctly, you mentioned that couriers were about 20% of the Smart! delivery mix in the fourth quarter, if I listened correctly? So do you have any expectation? No?
Not quite. We said that it increased relative to the baseline of a year earlier by 20%. So we haven't disclosed exactly what the proportion is between lockers and courier. We've told you how much it's gone up over the 12-month period because -- and it's primarily gone up because of those improvements that we described. . So going forward, it should be relatively stable because we made all the improvements that we wanted to make.
All right. So let me then drop that question because it was about how do you expect the mix to shape, so perhaps we can drop it.
So my final question would be about the merchants. So you were very kind to share the NPS for the buyers and for Allegro Pay, which are both fantastic. But I'm just wondering how is the NPS for the merchants shaping, given some of the price adjustments you made and given that there is probably more competition for merchants than it was some time ago?
That's a great question. It's something that, obviously, our consumer experience team invest massively. And it's also, if you recall why we changed the rules of the game not too long ago, probably 2, 3 years ago in terms of how long do we take between an announcement and the implementation of changes, right? . When you look actually at our Q4, the difference between the logs and what we deliver in EBITDA, the impact is actually us differentiating when we extend the customer benefits, lower MOV, to when we actually ask for co-finance, which is a full -- what is it, 2 months later, 3 months later? And that's exactly to drive that, let's say, merchant satisfaction, right? Not to change rule of the game. And it's something that we'll keep on focusing on.
Keep in mind that our stickiness with merchant goes far beyond this, right? It's all the tools, the traffic, the cells we drive from them. And here, we see our ability not only to attract new merchants, but also the stickiness of the existing merchant is extremely high. So it's something that we measure obviously, not only because of competitive environment. It's something that is core to our success, and it's something that is going very well.
But we'll keep on doing our homework to keep on deserving this, of course, like on the consumer side.
But I'm just not clear, is the MPS up or down for the merchants?
We don't comment on the MPS merchant side. There is constantly some volatility, you can expect that when you announce an increase, it may go in a temporarily in one direction, and as we improve things, as we've done on how fast we refund, for decommissions and on, it goes up, but it's not a number we comment on.
That's all from my side. Have a good day.
And the next, we have Lisa Yang from Goldman Sachs.
I have a few, if it's okay. First is on the mid-term guidance. I was just wondering why you're expecting a slightly slow GMV growth than previously? I think last year, you said you expect mid-term GMV growth of about mid 20s. Now you're talking about low 20s, including 2 percentage point of boost from the Mall group. So I'm just wondering is it just the view on e-commerce segment or the market share? Anything that could explain that would be helpful.
Secondly, I know you touched a little bit on the competitive environment already. Obviously, there's been a lot of new players entering the market, shortly recently Amazon was launching Prime at very reduced costs. How do you think your competitive moats have changed given, obviously, all the progress you made on Smart! and on next delivery, et cetera? How do you think your competitive moat have changed versus your competitors? Do you still feel like your lead is as strong as it has been? And where do you think is the next focus?
Third question is on margin. So obviously, we're seeing margin coming down a lot in 2022 versus 2021, obviously, for obvious reasons, given the investments. When do you think we're going to start to see margin stabilizing? Do you think this is something we could see more in 2023 or 2024?
And finally, and sorry for all the questions, it's on the lockers. I know it's very early days, but is there anything you can share with us in terms of the utilization rates that you are achieving today? When do you expect your local investments to contribute more positively to your EBITDA? Because obviously, I know you have a contract with [Indiscernible] just, yes, continue to hear in terms of when that will take place.
What was the first one?
The guidance. I think that's what you'll cover. I'll cover competitive mode, and then -- okay.
Yes. So there's a slightly slower growth in the margin. That would be, I think, partly coming because of the impact of Mall, right? Because of that 1P element in there is part of that. But -- and I think the other element -- the other element there a little bit, obviously, is we're taking into consideration competition, so the -- if you think back to the guidance that we issued this time last year, basically, we were still in the situation where we didn't have these extra international cross-category competitors. At the moment, we actually issued that guidance. So I think we have to take into some consideration that our pricing power in terms of monetization is a little bit less than it was when we were during the previous version of the plan.
So that a little bit of inflation, which has also really is suddenly had over the last 12 months as well, which is driving labor cost in particular. And that may feed through into also the cost of delivery because there's a lot of labor input in delivery.
These elements across -- it's a great question because I haven't really thought that through that what was causing that, but I think those are the main factors.
I'll cover the competitive mode. And here, maybe what is interesting is when you don't have a competitor in the country, it's kind of hard to imagine what would happen. And we had plenty of scenarios. For one -- at least the other one is, all know was a bit more of a surprise entrants. And what has been amazing is actually now that we have the certainty of the entrants, they have done it, is the resilience of our -- the proven resilience of our business model. And that has been, I wouldn't say a surprise, but it's always before they launch, it's always hard to fully predict. . But again, our leadership in selection, in pricing and delivery, that means that we're able to, despite the entry of some reasonably international size player to keep on growing in terms of consumer, in terms of seller base, in terms of use of the platform, in terms of Smart! user base across the spectrum with actually very limited noticeable impact. And that's a testament to all the work the team is doing on a daily basis, making the platform so competitive.
And it's something we take with all humbleness in the world because that humbleness is our tools to keep on driving that innovation road map. And that's why, by the way, we correct things in terms of products that Jon was talking about, very proactively.
The second question, I think, was about margin stabilization and when it will come through.
Lockers. Maybe I'll take that one. As I said at the moment, the -- Jon also said it, we're very much in terms of throughput of lockers very low. That means that in terms of EBITDA contribution, it's not there at all. I think it will be sometime in the later part of this year, and when we start having many more offers qualifying, there's a bit of, let's say, integration work we need to do. We'll have many more offers qualifying for our own lockers, and as a result, the throughput will come.
But at the moment, whether it's the installation cost, the maintenance cost, the cost of the locker themselves, the overall team progress, it's all on track to deliver on our long-term objectives.
Yes, sorry, just following up on the margin question. And actually, my first question was regarding more of GMV growth, retail GMV growth, which is a bit slower than previously. Just wondering that e-commerce market, which is expected to be softer.
Yes. I mean it's similarly being somewhat humble around the situation that we have now that there is more competitive intensity in the Polish market on the -- on the one hand, and we have factored that in. We do feel that when we look at both, as Francois was saying, really, the value proposition for the customers, the value proposition for the merchants is incredibly strong, yes. But it should mean that we think we can outcompete both Amazon and Shopee day to day to day to day. But you have to win those customers every single day, every single transaction, and it wouldn't be humble of us not to factor in a little bit of share for two big competitors.
Jon is rightly conservative. That's a good place to start, yes.
Maybe just to follow up on that. I mean, we're super excited about the Mall opportunity. Obviously, as Francois said, is that there's -- they are less competitive markets, and there's so much potential to turn Mall into something similar to Allegro with the deployment of the marketplace across those regions. So that's an important contributor on GMV for us in the future.
Michal?
Yes, I just want to say that we had all the questions already asked.
So thank you, everybody, once again for participating. Thank you for your questions. And yes, if you have any more, please send them to us. Thank you. Goodbye.
Thank you all, and talk to you in a few months. Talk soon.
Thank you.