Allegro.eu SA

WSE:ALE

Earnings Call Transcript

[Michal Kuzawinski, executive]

Good morning to everyone and welcome to Allegro Q2 2022 Results Call. I'm very happy to introduce to you today Roy Perticucci, the new CEO of Allegro. Roy will be hosting today's call together with our long-standing CFO, Jon Eastick.

[Roy Perticucci, executive]

Good morning, everyone.

[Jonathan Eastick, executive]

Good morning.

[Michal Kuzawinski, executive]

As you can see, unfortunately, Jon had to join us remotely today. And my name is Michal Kuzawinski, and I'm Head of Investor Relations. Show the slides, please. Thank you.

You can download a copy of this presentation from our IR web page at allegro.eu. When you do so, I encourage you to read the information contained on this slide, #2, with the disclaimer.

Let me now introduce the agenda for today. Roy will begin today's presentation and talk about his initial perspectives after the first month as Allegro's CEO. Then we will hand over to Jon, who will talk you through the main part of the presentation, the business highlights, financial results, before updating you with our 2022 expectations. And then we'll open to Q&A when you will have an opportunity to ask questions.

My final remark is please remember that this call is being recorded, including the Q&A session, and the replay will be available on our IR web page at allegro.eu.

Let me now hand over to Roy Perticucci.

[Roy Perticucci, executive]

Thanks very much, Michal. Good morning and thank you for joining us today. I am very happy to become part of the Allegro team. I'm not new to e-commerce, and I followed Allegro for many years. And I've always admired the way that Allegro has carefully nurtured strong relationships with Polish customers. That bond is incredibly difficult to achieve and just as hard to maintain consistently.

There are very few companies that can match Allegro's emphatic desire to serve customers, and this focus has served them well over decades. I've known some of Allegro's leaders for a while, and I'm excited by the chance to join such a talented group, especially as we move beyond Poland and into neighboring countries. This next step is not going to be easy, especially now in this time when family incomes are being eroded by high inflation and uncertainty. But with new challenges come new opportunities, and I'm convinced that our marketplace model will be the solution for both customers and merchants during this time frame.

Since my arrival in Warsaw, I've been getting stuck in. I've been engaging with staff. I've been spending time with merchants and business partners in discussing plans with my senior team and the Board.

So let me summarize my perspective after my first 30 days or 29 days as Chief Executive. Sort of one general theme that appears is that we've invested ahead of growth over the past few years, and that's been reflected by a rising share of central costs and a markedly changed capital structure. And while most of those investments have been worthwhile, we still need to stay within our means. And that means that we need to be certain that the investments we do make will generate both the cash flows in terms of -- generated by both future growth and reducing leverage.

So another theme that I'd like to mention is we've got an awful lot of lines on our to-do list. Maybe we're trying to do too much at once. I'm not commenting on any single projects, but rather, I'm questioning whether we are sufficiently clear to ourselves about our priorities. I'm also a fan of giving well-defined set of projects, sufficient resources to complete its speed and then move on to new objectives. So I'll be diving deep on this question, and we'll work together with the team to stack rank our initiatives. We want to take on the most value-accretive task first, account for realization work -- excuse me, realization risk and then make sure that we don't take on more than we can finish with the people we already have.

So over the past 4 weeks, I've been working with the team to set some of these priorities. And I've -- we've come together with a list. Our first priority will be to continue to be strong in Poland. That means in addition to continuing our performance in existing segments, we know that we need to improve selection and shopping experience in categories such as health and beauty, fashion and ambient grocery. Often, these are areas of particular interest to women shoppers. And to do that, we'll need to attract new merchants to our platform. We want to direct the same passion we already feel for customers towards improving the merchant experience.

A second point is international expansion of our marketplace model. The acquisition of the Mall Group was a heavy investment and a bold first step outside of our home market. Over the course of the next year, we'll need to convince first check and later slowback customers of the attractiveness of shopping on an online marketplace. There's much preparation still to be done here.

Our third priority is our foray into financial services. The buy now product that we already have on the market has -- sorry, the buy now, pay later product that we already have in the market has grown by over 200% a year, and it's been a fabulous GMV generator.

My vision is to pivot our growing FinTech business into a self-funding operation with positive EBITDA. And to do that, we need to develop new products and move the loan book off our balance sheet.

So I'd like to pause here for a minute. An old boss told me slightly more than once that I had to be able to walk and shoot gun, and I think this role also applies here. The priority I've listed so far are orientated for growth. A cash generation relies not only in driving growth, but also careful attention to costs. And so top of my gum list is the disappointing first half trading performance of some of the 1P companies within Mall.

Good news is that growth is coming back in the second half, but we'll need to continue to focus on margin performance. A second cost priority, of course, is trans cost. Customers across Europe expect free delivery. SMART! has been an extraordinary -- has been extraordinarily successful at generating GMV growth by enabling merchants to offer delivery at loan subsidized cost. After all, Allegro covers over 70% of the total cost of transportation.

But there's another result. Those costs of delivery we've delivered -- we've transferred from shipping, so we transferred from customers to our own income statements, and those logistics are now our single largest cost bucket. So we'll need to intensify the collaboration with carriers to manage the impact of their own rising fuel and labor costs. We'll also need to work equally hard to improve the productivity on our own operations.

Third on our list of costs are central costs. We need to make sure that talent is deployed as productively as possible within a new post-merger structure. And as I mentioned earlier, we need to evaluate our project portfolio by returns on investments and also on realization risk and look also and further that to our expense policies and our cash outflows in general.

So chief executives often end their talk with the people topic, and I'm no exception. We need to shift from recruiting from outside local markets and spend more time evaluating the tremendous amount of talent that we already have. And we want to make sure that we're deploying them as best as possible in both rewarding, but also stretching tasks. I'm not saying that we're going to close the tap on recruitment, but I do think we should spend more time in being certain that we're getting really good at finding spaces for our best talent developing growth.

So I think these 7 priorities are fairly clear. We need time to refine our plans in order to execute them in a structured and rigorous manner. So at this point, at the very early point in my tenure, I can only say that my excitement over the task at hand, I've only grown stronger over the last 4 weeks. I'm looking forward to work with our staff and to deliver continuous improvement -- continuous improving experience both for customers and merchants.

Let me hand over now to Jon, who will take you through our most recent results.

[Jonathan Eastick, executive]

Thanks very much, Roy, and I'd like to welcome everyone one more time. I should explain why I'm actually not sat together with Roy as I would really like to be. Unfortunately, 2 days ago, I tested positive for COVID for the second time. And that means I'm sat here in my little quarantine cell and trying to contribute remotely to the presentation.

So with that in mind, can we share the slides, please? And I'll start the presentation that really focuses on our second quarter performance, which, of course, now includes Mall for the first time. So I'll be going over the Mall results in a lot more detail and showing how it's all going to fit together going forward in terms of our financial reporting. And then I'll also be covering, obviously, our expectations for the rest of the year.

So let's move to the first slide, which is the overall highlights. I'm controlling the slides. Here we go. And let's start with the Polish operations, which has gone very much as we expected in the second quarter, with our GMV growth accelerating significantly. We posted 16% year-on-year growth in GMV for the Polish business only. That's up significantly from the 12.8% growth that we manage for Q1 and is in line with those expectations that we have.

It really shows the resilience of the Allegro model given all that's going on around the consumer and around the cost of living crisis that we're able to post such strong growth. I don't think there are too many e-commerce businesses across Europe, which have managed to grow 16% during the second quarter of this year. It really shows how our model has key benefits for the consumer, the multi-category approach, the massive selection, the focus on very attractive prices and bargains, and the convenience of shopping with us. It really brings the buyers back to us week after week, month after month and bringing so much of their shopping to Allegro. And we think even in the circumstances that we see at the moment, that is set to continue that we are going to be a big part of the solution for consumers as we go through these difficult periods of time.

So the GMV growth moved on to 16%. Monetization also progressed as we indicated it would. We introduced higher cofinancing rates at the end of the first quarter. And a full quarter's impact in Q2 took our Take Rate up 35 basis points to 10.81%. And that, combined with a very good quarter for advertising growing 26.5%, meant that our revenue lines moved on strongly and we were able to improve our adjusted EBITDA margin considerably versus Q1. And we cut the year-on-year reduction in adjusted EBITDA from 13.6% a quarter ago to just a 1.5% decline in the second quarter. And we're expecting that increase or that rate of increase to continue strongly through into the third quarter and beyond. And I'll talk more about the expectations later in the presentation.

We continue to make great progress with our delivery. Our delivery speed in terms of next day is up another 6 percentage points year-on-year in the second quarter. And it's been another standout quarter for Allegro Pay. I'll go into more detail about how well it's performed a little bit later in the presentation.

Obviously, another big milestone is the acquisition of Mall, which took place on the 1st of April. I'll be going through what we're doing on the integration side and our plans for the future on the one hand and going deeper into their financial performance on the other during the course of the presentation.

Okay. So let's focus in on some of this wide range of initiatives and projects that we've been running across the business during the second quarter. As Roy points out, we really fired up along across many different projects at the same time. But there's a few things that I would like to highlight as we go through the next 3 slides, which cover the business update.

Starting from selection. It was another very good quarter with adding brands at speed to our selection. You can see over 200 new brands added in the second quarter. And I also want to focus in on how we're starting to utilize the investments we've been making in productizing the back end of our platform, so getting our merchants to associate their offers with particular products into how we're now starting to utilize that on the front end, creating shopping paths, which allow customers to search for specific products rather than to just simply browse offers as has been the old-fashioned or the older model or the well-known model of Allegro over its previous 20 years of existence.

That productization -- that product size perspective allows people to find products much more quickly and is extremely important for our future in the Mall region where there aren't really any offer-based marketplaces already present, and customers really expect that productized search perspective. So everything we're learning here on the Polish platform, we're going to be leveraging double and triple when we start the marketplace in Czech Republic in 2023.

On price competitiveness, we've talked many times about the toolkit that we've been building to enable us to cooperate with merchants to ensure that the Allegro marketplace, it always has the best possible price available on the market available to the consumers so that when the consumers visit, it reinforces the perception that at Allegro, you're going to get the best price, and you don't need to shop anywhere else.

The toolkit is fully operational. We're investing more money and sharing more Take Rate with the merchants to bring down the number of what we call price defects, which is places where we don't meet that mission of ensuring we have the lowest market price available. We're investing more money behind that, and that is really helping us in terms of our price perception that's helping us drive GMV and bringing customers back and driving frequency.

In terms of delivery, I already mentioned the progress we're making on our point-to-point merchant fulfilled network where we directly deliver from a merchant warehouse to the consumer. Delivery speed moving up steadily from quarter-to-quarter. It's also worth mentioning how we are doing on the One Box project. We've already got 2,000 lockers installed. We have a plan to reach 3,000 by the end of this year. And the proportion of merchants who are now connected with One Box and are, therefore, able to deliver their offers into our proprietary locker network is increasing steadily. And we're increasingly now focused on the front end and, in particular, the checkout process to ensure that our fair share of deliveries flow into those lockers and we get the return on investment that we're expecting.

So moving on to the key growth levers that take the basic proposition and turbocharge our growth across the marketplace. And let's start with SMART! So the number of customers who have got SMART! subscriptions continues to move up strongly, mainly from 2 sources. One is the uptake of Allegro Family where customers of the same household can share a single SMART! subscription is continuing to accelerate. And secondly, Smart! na Start, which is our introductory free offering that includes 5 free deliveries, continues to be a stepping stone that results in many, many Smart! na Start users converting to becoming full SMART! subscription payers.

Also very important is that we're now very focused on the economics of the SMART! offering. We have moved, as I said, in the first quarter to increase cofinancing, which took the costs shared with the merchants from approximately 20% up to about 25% of the total cost of delivery, which is obviously on our income statement. We made a further adjustment in the third quarter that kicked in on the 1st of August and moves the share up to approximately 30% of the total. So this is obviously going to help considerably with margins and with balancing the P&L around SMART! advertising, as I said, had an extremely good second quarter, advancing 10 percentage points faster than GMV growth at 26.5%. We introduced additional inventory on the shopping path. And we also managed to improve relevancy, which then delivered higher click-through rates and drove revenue across the advertising offering. So a very strong quarter for advertising.

Then let's look at Allegro Pay. This was a really excellent quarter. I think the first point to highlight is that we've reached 1 million onboarded customers as of June, which means that's 1 billion -- sorry, 1 million of our active buyers who have available at any point in time as a personal credit limit that they can use with Allegro Pay to make purchases. And they're doing that in -- with great frequency, as you can see, PLN 1.26 billion of loans written in the second quarter. That represents 260% year-on-year growth. And as I've mentioned many times, this is very calorific in terms of GMV contribution. Our estimates are that about 35% of the spending is incremental when we compare it to customers who do not have the benefit of an Allegro Pay credit line.

When it comes to credit risk, the situation stays very much under control. And obviously, we're very closely focused on the cost of living crisis and what that might do for the creditworthiness of consumers. And from that perspective, I think you can also understand that it's only 1 million customers that we've onboarded to Allegro Pay so far. We have 13.5 million users on the platform, but we've so far been very careful about how much credit we extend, and that will continue in the current economic context.

When it comes to the Allegro Pay balance sheet, that PLN 1.26 billion of loans was possible with only about PLN 350 million of incremental balance sheet put into operation. And of that PLN 350 million, PLN 273 million was then sold on to our financing partner, AION. So our own balance sheet only increased 22% during the quarter, up to about PLN 80 million to PLN 445 million of loans actually on the balance sheet. So Allegro Pay is really firing on all cylinders, and we're very excited about the prospects for the future.

I'll cover international development rather on the next slide, which -- sorry. There we go. On this slide, which deals specifically with the Mall transaction and with the integration. So as I mentioned, we acquired Mall on the 1st of April, and we were already working hard in terms of the integration as we got to that date. But since then, obviously, the pace of work has accelerated tremendously. We've got over 15 teams jointly created for Mall employees and from Allegro employees working across a whole bunch of different projects and work streams. And the general cooperation between the 2 organizations is really excellent, and we're very positive about the culture that we're building together.

There are 2 main areas that we're focused on. The first one is to prepare the marketplace or the Allegro marketplace stack to be launched as an Allegro.cz marketplace address in 2023, initially for the Czech market and then later for the other markets in the Mall region. This is obviously a huge project, which -- and I'll go into in a second in a bit more detail about what's involved. And then the second stream is around turning around the Mall 1P operations, which, as you'll see when we get to the financial section, are under significant pressure given the economic environment in the Czech Republic and given their positioning as an e-store and their particular specializations around electronics and consumer durable products. So we're very focused on how we turn that business around and stabilize it. And we've already made a lot of progress in that regard, as I'll cover later.

So when it comes to the 3P platform, we've already got a check version -- a check language version of the platform up and running as a language choice on Allegro.pl, and we'll be perfecting that over the coming months together with the Czech team to make sure the experience is really excellent. We're working hard on expanding the amount of delivery options that are fully integrated to enable us to ship cross-border and deliver fast within the Czech Republic. And we're working on the go-to-market and launch campaign and utilizing techniques that we've effected in Poland like price management that I was discussing earlier once we get up and running in the Czech Republic.

On the 1P side, we've been very focused on selection, increasing the amount of 1P selection, and particularly in top sellers, and also focus on stock levels and reducing the amount of overdue stock that Mall has within its inventory. We're very focused on their costs, and we're also focused on sharing techniques around marketing, spend management and improving returns on investment.

So that's the end of the business update. Let me move on to the Polish operations. And this slide is one that we normally just include as an aide memoire so that you've got all the key KPIs at your fingertips. The one thing I just want to point out here today is that although we bought Mall, the Polish operations and the way we present them is totally unchanged. And therefore, these KPIs are fully consistent backwards the 2 years to the IPO and all the previous quarterly reports that you've seen.

Okay. So as we go through the financial part of the presentation for the Polish operations, we start as usual with active buyers and spend per active buyer. The quarter was very good from an active buyer perspective. We've added 200,000 additional active buyers. And this, again, I think, reflects this resilience that I was talking about of the Allegro marketplace and the USPs that we have for the Polish consumer. So the customers are coming to us in these difficult times, and we expect that to continue as the year progresses.

As usual, the bigger driver when it comes to the total GMV growth is on the spend per active buyer side. And again, consumers bringing their increasingly scarce spending power to Allegro, 13.9% growth on a year-on-year basis. So now the average buyer is spending PLN 3,350 on an annualized basis on the platform.

Putting those 2 elements together, as I mentioned earlier, our GMV grew 16%, which means we've landed on PLN 12.1 billion of GMV for the second quarter. And it means that our last 12 months GMV is now up to PLN 45.5 billion at the half year.

It's worth remembering that the last of the lockdowns that we had in the Polish economy that had an effect on retail concluded right at the beginning of May last year. So since early May, our growth rates have accelerated strongly. And as you see at the bottom of the slide, we're also today sharing our current trading, which is effectively at this point the full third quarter. And we're actually tracking towards a full third quarter landing above 20% year-on-year growth. So that acceleration is very much in line with what we were anticipating earlier in the year.

It's also worth to note where this growth is coming from between real growth in terms of the number of transactions. You can see that in the second quarter, we had 9.1% increase in the number of transactions, which is actually holding up very well when you look on a last 12-month basis. The growth was 11.4%. So the slowdown in the economy is not really all that visible yet in our real trading performance in terms of transactions.

On the other hand, obviously, as we were anticipating in previous meetings, the inflation that's going through the economy is indeed starting to feed through into product prices and the rest of the growth that we have to arrive at that 16% is obviously various elements of inflation, but also selection aspects. But 9% transaction growth -- real transaction growth still present within our GMV growth.

So moving on to revenue. The higher Take Rate that I was describing earlier coming from some increases in commission rates, but mainly from the cofinancing change that we made in the second -- at the beginning -- at the end of the first quarter. Together with the advertising improvements and the accelerating GMV growth is driving our revenue growth at 22.3% to PLN 1.6 billion of revenue for the second quarter.

Moving on to looking at the adjusted EBITDA performance. The combination of the faster growth in GMV and the higher monetization and strong performance from advertising has enabled us to greatly improve our EBITDA performance compared to Q1. We managed to reduce the decline to just 1.5%, and we also managed to improve our margin on a sequential basis to 4.55% of GMV, which is about 27 basis points better than we achieved in Q1.

Sorry, the COVID having some impact on my voice.

Looking at the cost side. The net delivery costs put a PLN 136 million drag on our EBITDA performance, but that includes the effect of the investments that we made in our SMART! products by making courier more accessible during the second half of last year. And so those effects are going to -- we're going to start to lap as we move into the third quarter. And we would really only be looking at volume -- additional SMART! volume in terms of the impact on our EBITDA margin.

When we get into the fourth quarter, we are expecting some of our delivery partners to increase the prices that we're paying. And that will then obviously create a new headwind on the delivery cost line. But in Q3, that position should get considerably smaller.

When it comes to SG&A, as you know, we've been investing heavily to build the innovative capacity of the organization over the last 2 years or so. We have come to the conclusion that in the current environment, it's time to slow that down. And our staffing was only up 2% quarter-on-quarter in the second quarter versus 26% year-on-year for the last 12 months. We do have a general freeze in place, although that doesn't stop us making targeted investment -- investments in key new personnel, as Roy was indicating.

Looking at capital investments. We invested on the -- in the Polish business PLN 209 million in the second quarter. A large part of this investment program -- we've lost the slides for some reason. Yes. Thank you. A large part of the investment program was obviously the locker rollout as we move through 2,000 installed lockers on our way to 3,000. There's also quite a lot of investment going into fitting out new offices that we've been taking delivery of over the last year or so in Poznan and in Warsaw on a floor-by-floor basis. So those costs should be rolling out of our CapEx program as we move into the next year.

On the capitalized development cost side, obviously, the growth in the team and the number of people that are working on new innovations, and particularly on internationalization, translates into an increase in the amount of capitalized development costs that you see there, PLN 81 million for the second quarter. So that's the Polish operations covered.

And now we'll move on to look at the Mall operation. And these are the KPIs that we'll be reporting for you on a sequential basis quarter-to-quarter going forward. And one thing, I think, it's worth to emphasize while we're on this slide is that the GMV from this legacy Mall business that we've acquired, so from the e-sale business with a relatively small 3P marketplace included is amounting to PLN 787 million, and that is basically only 7% of the GMV of the Polish operations, yes. So the legacy business that we've acquired is actually not very large relative to our existing operations. And this acquisition was much more about Mall as a stepping stone to give us the foundations to address the total addressable market in Southern Central Europe, which takes our total addressable market to about 70 million population. And it also gives us the opportunity to deploy the Allegro marketplace in the Mall countries and really turbocharge this existing business with the Allegro capabilities and merchant base.

So that said, let's have a look at the financial performance of the -- of this legacy business. And the place to start here really is to acknowledge that Mall is operating in a very, very difficult environment. And this is coming from 2 perspectives. The first one is that going back again to the topic of COVID, in the Czech Republic, in particular, it was -- the lockdown processes that were followed by the Czech government were amongst some of the strictest in Europe in that they kept offline retail closed for months on end during the height of the crisis. So most sales were necessarily going to the e-commerce segment all the way up until March of -- sorry, May of 2021, yes. So that represents a really significant headwind for the Mall business as it moved into 2022.

Secondly, the inflationary situation in Czech Republic is very similar to the rest of Central Europe. And Poland, they've got 17% inflation. They've got interest rates at 7%. Consumers are under tremendous pressure. And as Mall is very focused on electronics and consumer durables, that also translates into significant pressure on demand for their products.

Putting those 2 things together, it's maybe not surprising that if you were to look at their Q1 growth, so the quarter before we acquired Mall, they were actually shrinking 18% year-on-year in the first quarter. And in that context, I think the 6% decline that we've noted for the second quarter actually represents a tremendous improvement and reflects the drastic steps that we took to focus on selection and to make them -- and also on pricing to make sure that they're fully competitive in the market so that we could stabilize their active buyer base and stabilize their GMV. And that has continued into the third quarter in that we are expecting that we'll be able to announce a slightly positive like-for-like and constant currency growth for the Mall business when we announced the third quarter in a couple of months' time.

Where the problem really is here is that the price of stabilizing the GMV is coming in the margins. We're having to discount prices to match the market best prices the same way that we do in Poland. And that's cost us about 3 points of gross margin, bringing the gross margin down to 12%. And that then, together with the lower total GMV, has caused the adjusted EBITDA loss to blow out from PLN 17 million to PLN 67 million in the second quarter of this year. We know that this is not a level that we want to sustain. We know that we want to turn this around as quickly as we possibly can. And we're very focused on this going forward, as Roy said in his opening remarks.

Okay. So that then brings us onto the group perspective. And again, this is how the KPIs will look for the total group. If we take GMV as an example, the Mall GMV is added on top of the Polish GMV to get to this consolidated results. When we look at year-on-year numbers, these are the numbers that are in the financial statements. So there's no Mall in the prior year. These are not pro forma numbers. And therefore, all the incremental GMV from Mall is reflected in the year-on-year growth figure that you see there of 23.5% for the group.

So a few comments then about leverage in the group as -- which has obviously moved significantly as a result of the Mall transaction. 1st of April, when we actually made the acquisition, the additional loans that we took to close the transaction, you may recall that approximately half the transaction was paid for in stock at -- issued at PLN 55. The other half was paid for in higher debt, lifted our leverage from about 1.8 to 3.26x of EBITDA. In the interim 3-month period to the end of June, the leverage moved up a little bit further to 3.54x EBITDA. And the reason for this is fairly obvious. We're starting to include the Mall losses into our last 12-month adjusted EBITDA for the group. So that contributed PLN 67 million and a loss and reduced the combined adjusted EBITDA slightly to '19, '20.

And on the other hand, the net debt moved up slightly in the interim period, but part of that was a noncash adjustment to the amortized cost of the borrowings of about PLN 60 million. Going forward, we do expect later in the year that this leverage will start to bend down. That's because we're expecting much stronger year-on-year growth from the Polish segment and a slowdown in the scale of the losses on a quarterly basis within Mall, bearing in mind again that Mall's business is extremely skewed towards the fourth quarter and the Christmas trading period.

One other thing to point out here as well is that we're very well protected on interest rates. PLN 4 billion of our total net debt of PLN 6.8 billion is fully hedged into fixed rates. And we actually have a very attractive blended rate of just 1.3%, which compares to the viable rate of over 7% at the current time. And that difference is worth something like PLN 250 million a year in lower interest payments, and that will last out until 2024 when these contracts expire.

Looking at net profit. We did book a small loss of PLN 63 million for the second quarter. There were 2 one-offs within the P&L below adjusted EBITDA, which you see here. The first one I mentioned previously regarding the valuation of our borrowings. The second -- and that was a noncash item. The second one is related to taxation on previous years following the conclusion of our tax -- of a tax audit that was running within the group. Happy to take questions on that if anyone wants more details later in the meeting.

Okay. And that then brings me to my final slide, which is to cover the expectations for 2022, which we've concluded we need to revise slightly. As in the previous quarter, we're presenting our expectations separately for the Polish operations and separately for our newly acquired Mall segment. And on the right-hand side, you see there basically the mathematical blend when we take the group perspective on the overall performance.

So let me start by focusing on the Polish operations and starting with GMV. The first thing to say is that Q2 and Q3 are very much gone the way that we expected. We're sequentially accelerating GMV, and we're now trading above 20% GMV growth year-on-year. But when we're looking at the news flow around the situation in the world, we are noting that the level of economic uncertainty is really reaching unprecedented levels. And when we're looking at the macroeconomic indicators that are coming out sequentially for the Polish economy, they are flashing that there's an imminent slowdown ahead. And with that in mind, it's very difficult to judge exactly how the Polish consumer is going to hold up. We've always been a big fan of the Polish consumer, and we remain confident in their ability to sell. But things are just that much more difficult to judge than in a normal period, and we don't know how the fourth quarter is going to pan out.

So with that in mind, we've taken down the upper end of our guidance for GMV from the previous 20% to the 17% level that you see here. Now that then obviously has a knock-on effect down to the upper end of the guidance for both revenue and for adjusted EBITDA that you see on the following 2 rows.

Capital investments, we're taking down that guidance a bit further by another PLN 50 million. We are chipping away our CapEx program, finding savings wherever we can. And as we've slowed the hiring, we won't have quite as much capitalized borrowing cost as we previously planned for. So we're now expecting to land between PLN 650 million and PLN 700 million for the full year.

Moving on to the Mall segment. And our original guidance was focused on how quickly we would get back to positive growth, and we were predicting we do that in the fourth quarter. As you've just heard, we're actually a bit of ahead of schedule. We think that's now going to happen already in the third quarter. But on the other hand, we really want to focus on controlling our losses and turning the business around overall and focus a little bit less on the absolute level of GMV in what again is a very uncertain situation for the consumer in the upcoming fourth quarter.

So with that in mind, we've rephrased the guidance to look at it in terms of year-on-year growth for the full 9-month period. And we're now expecting low single-digit decline in GMV for the Mall Group for the full 9-month period that we're consolidating, which is considerably better than that 18% loss that they were incurring in Q1 that I mentioned earlier.

That has a similar impact on revenue. When it comes to adjusted EBITDA, those much lower margins than I was flagging earlier in the presentation unfortunately mean that we do need to push out the adjusted EBITDA guidance to a loss of something between PLN 120 million and PLN 160 million.

CapEx is coming down as it is in Poland to PLN 70 million to PLN 100 million. And it's worth noting that the majority of that PLN 100 million is actually Polish development going on around the marketplace that we're going to deploy as Allegro.cz in 2023. So that's the expectations.

The final comment that I want to make is around our medium-term expectations. As we move into the planning phase and the team started to work hard with Roy on implementing his vision and planning for the future, we also note that the medium-term expectations that we set previously we happen to set coincidentally on the 24th of February, which, of course, was the day that Russia invaded Ukraine. And clearly, the world, especially from the Polish perspective, looks at a very different place than it did, what is it, 8 months ago as the world has changed dramatically.

So with that in mind, we've taken a decision that we need to put the medium-term expectations under review, and we will be back to you probably -- well, definitely in the first quarter once we finished our annual planning process to update you on our medium-term expectations for the next 3 or 4 years ahead.

So that's the end of the prepared comments. I'm really hoping that I'm going to be sat with Roy in doing this together when we meet in just under 2 months' time to talk about the third quarter. I'm going to hand it back to Michal, who will run the Q&A session. Michal?

[Michal Kuzawinski, executive]

Thank you, Jon. [Operator Instructions] And our first questions come from Cesar Tiron from Bank of America.

[Cesar Tiron, analyst]

I have 3 questions, if that's okay. They are all mainly focusing on the cost side. So the first one is on the -- what the 2022 guidance implies in terms of EBITDA growth in H2. I think it's about 30% versus about 10% decline in H1. So of course, take rates are increasing, and there's some normalization of delivery cost as a percent of GMV and also more has significant seasonality, which we talked about. But what else will drive this EBITDA uplift in H2? That would be the first question.

Second question, given that we are very close to the end of Q3, are you willing to share how margins would evolve between Q3 and Q4 this year?

And then the last question would be, coming back on the long-term plan, which you are working on revising, I think you did mention a couple of times the word cost. I just wanted to ask if we could end up with more focus on the cost side from Allegro going forward, especially cost on delivery, and maybe if the KPIs could be more balanced towards free cash flow generation margins as opposed to growth, including for maybe management incentives.

[Jonathan Eastick, executive]

Cesar, thank you very much for the questions. Roy, would you like that last part of the question, and I'll take the first 2?

[Roy Perticucci, executive]

Sure. I think so. I think one of the things that I said in my introductory talk was that we need to really sort of focus on the returns of the projects we're doing. And so I think we'll continue to do that, and we'll continue to focus still more does the project generate the growth that we're looking for, does it improve overall our cost position? And I think it will continue to prioritize on those 2 criteria, keeping in mind also realization risk. And I think really sort of one thing that will probably make a difference in terms of the impact is I'll be looking for also timings of how actually we can make those changes touch the numbers.

[Jonathan Eastick, executive]

Great. Okay. So Cesar, you were asking about -- to give you a bit more clarity on the margins going through H2, if I understood it correctly.

[Cesar Tiron, analyst]

Yes. Just want to better understand the -- obviously, there has to be a significant uplift in the absolute EBITDA.

[Jonathan Eastick, executive]

Yes, yes. Yes, exactly. Okay.

[Cesar Tiron, analyst]

And also what should be [indiscernible] is that? And the -- how it is split between 3Q and 4Q, if possible?

[Jonathan Eastick, executive]

Sure. Yes. So it's a great question. So the key thing in Q3 and Q4 is that we start to lap, first of all, all the MOV investments that we made, if you recall, taking down the SMART! MOV for courier from PLN 80 all the way down to PLN 40, actually increased our cost base considerably, increased the volume of SMART! customers, but it also increased the share of courier in the cost of delivery mix quite considerably. We start to lap all of those impacts from Q3, and that obviously takes a major drag out of that EBITDA bridge that I was going through earlier and helps the performance considerably in terms of year-on-year EBITDA growth.

On top of that, you've obviously got further acceleration in the GMV growth in the third quarter, which we flagged very clearly. We're heading towards over 20% growth on the Polish business and a stabilization in the Mall business.

When it comes to the fourth quarter, we are factoring in that the arrangements we have with our key delivery partners does result in us needing to factor in higher unit costs, and that's fully taken into account into our guidance, yes. So that will be a new headwind that we'll need to deal with, but it's at a manageable level. And we also need to remember that the inflation, which is coming through in our GMV that I was talking about, 9% real growth in terms of transaction numbers and the rest of the growth -- so 6% or 7% of the growth is effectively monetary.

Because of our commission-based model, we're actually earning more Take Rate on that inflationary increase, yes. So that gives us some natural protection against the -- let's face it, justified cost increases that our delivery partners are facing because of their own costs.

The other -- one other element that I really need to make sure that everyone has picked up, we have made a second increase in cofinancing with effect from the 1st of August. We've moved the -- the effects of this has basically moved the share of current delivery cost covered by the merchants up to approximately 30% of the total. And that obviously in Q2 -- in Q3 is going to have a positive impact on margins. And in Q4, it will offset some of the -- or a large pie, in fact, of the increases that we may face on these delivery expenses, okay? So that altogether, that means that we do expect to have a pretty strong year-on-year growth in our adjusted EBITDA even in the fourth quarter. Hopefully that answers your question.

[Michal Kuzawinski, executive]

Thank you, Cesar. Next, we have questions from Luke Holbrook from Morgan Stanley.

[Luke Holbrook, analyst]

Just a question really on the strategic outlook for your fulfillment business. I'm just trying to get a sense of how quickly you think that you could in-house the fulfillment from here maybe in light of impose price increases from November. Do you think long term strategically, there'll be a shift there?

And then just secondly, on that 30% contribution from merchants today. Where does that get to by the end of next year?

[Roy Perticucci, executive]

Jon, I'll talk to logistics, and you talk about the Take Rate.

[Jonathan Eastick, executive]

Yes.

[Roy Perticucci, executive]

So overall, I think really logistics choices are driven by 3 things: speed, reliability and cost. And one of our great strengths is, historically, we've been an asset-light model. And I think wherever we can, that's where we want to stay. So as long as we can work with our carriers, sort of control costs, I don't have a huge priority to sort of rapidly grow out the market, other paths sort of the network we have at the moment. I think it's a question of choices and how well we can collaborate with our several carriers in the market.

I think there are 2 other things to say here. The first one is it isn't -- hasn't been since February that carriers have been dealing with rapidly rising fuel costs. It's been over a year. And so I think it's reasonable to understand that those costs are rising. And the same thing is true with labor, which, to some extent, has been scarce, particularly in the sector. So I think it's more about what the overall impact is as prices as a whole -- cost as a whole rise with inflation. That said, I think the team has done a fabulous job of building out an infrastructure in very short time. I think it's something like 2,000 lockers across a great part of Poland. And they've also developed an in-house logistics or trans capability.

And I think at the moment the question is not about capacity, but about capability. Are we actually utilizing the resources we have effectively? And so I think we'll probably spend some time on that area and sort of getting the best use out of what we have before we decide whether to go forward or not. And then the rest, as I said, is more of a question about speed, reliability and cost.

[Luke Holbrook, analyst]

Understood.

[Roy Perticucci, executive]

And then I think Jon had the other half.

[Jonathan Eastick, executive]

Yes. I've got the other half of the question, yes. So the question was whether -- what to expect in terms of the 30% share of delivery expenses being covered by the merchants. So I think the first thing, obviously, would be that if those price increases do come through as we expect in Q4, that 30% number would step back a little bit because we'd have to cover a higher cost from that cofinancing. But more to the points that Roy was raising earlier in the presentation and in his opening remarks, we really feel that we need to focus on our operational costs and our efficiency and do our homework, if you like, before we look to merchants to fund higher shares of cofinancing and delivery expenses. So that -- so it doesn't mean that we won't make further increases at some point in time, but we don't have any firm plans at the moment. And we really want to do something that we haven't been particularly focused on in Allegro previously, which is to really take a closer look at our own costs and the use of capital and the number of projects that we run simultaneously as a first source of funding for the next few quarters.

[Roy Perticucci, executive]

Yes. If I could add just something here. I think, again, merchants and merchants' loyalty to our marketplace has been a source of our success. And so we want to make sure that we do everything that we can to make trading on our marketplace for both Polish merchants and for merchants throughout the area we currently now serve, find it attractive to continue to do so. We can't help the fact, unfortunately, that we're in a period of really high inflation. And so those inflationary costs will pass through. And so I'm sure the numbers on the invoices that merchants see will be different. I think for us, the priority is just to make sure that the total percentage of their sales doesn't vary very much unless we really don't have another choice to do it.

[Michal Kuzawinski, executive]

Thank you, Luke. Now we have questions from Lisa Yang from Goldman Sachs.

[Lisa Yang, analyst]

So firstly, maybe a follow-up on your comments, Roy, and thanks very much for presenting your 3P priority. So it does feel like you're going to be more selective on investments. So I'm just wondering if you can maybe, at this stage, highlight how you would rank those investments. Like what is the priority? What is [indiscernible] priority? I think you did flag Allegro Pay being a priority. So just wondering if you can give us a bit more clarity on that at this point in time.

I think the second question is on your GMV growth guidance for the full year. So I think in July, you were up mid-20s. Now you're saying Q3 above 20%. So I'm just wondering are you seeing any slowdown versus in September. And obviously, your Q4 guide [indiscernible] anywhere between 10% and 17%. So also wondering any early indication into October, whether you're seeing it throughout indeed.

And the third question actually is on your revenue growth guidance. It feels like you have taken down your revenue growth guidance ex Mall a bit more than your GMV growth guidance because I think on the GMV growth, you're just narrowing -- just cutting the upper end. I think on the revenue growth guidance, you're actually taking it down by 2 percentage points. So just wondering what's driving that. Is it more cautious you're not advertising or able to increase Take Rate, so any comment on that would be great.

If I can just sort -- last question, if possible. I think you mentioned earlier, you're going to be launching Allegro.cz in 2023. So just wondering, are you going to have 2 brands in Czech Republic, so the Mall Group and Allegro, or you're going to discontinue the Mall Group brand?

[Roy Perticucci, executive]

Okay. [indiscernible], Jon. I'll do...

[Jonathan Eastick, executive]

I got the second one.

[Roy Perticucci, executive]

You got the second. I'll do the third. I'll do the first and the fourth, yes?

[Jonathan Eastick, executive]

Good.

[Roy Perticucci, executive]

And just sort of a general comment. This is my 29th day in the saddle. So there are a couple of places where I have a strong desire to say something, but I'm also acutely aware of what I say can have quite a bit of large impact. So I want to make sure that we get the numbers absolutely right. And I'll be, I think, much more involved in those discussions and in my next iteration. This is my maiden voyage of doing these sorts of events.

Let me speak to our growth priorities. Our #1 priority is we have a tremendous strength and position built over decades in Poland, and that is reflected particularly through the loyalty of both merchants and customers to shopping on our site. And so there's a -- first point is to make sure that, that base continues to tick over as it does. And I think there are 3 areas that I've outlined where I think there is additional opportunity to grow within the Polish market. Those are the 3 segments that I mentioned, health and beauty, ambient grocery and apparel. To that, I would probably add we already have a sizable chunk of small businesses that shop with us. And I think, again, that's also something we need to look at.

Over and beyond that, this company a few years ago made a first foray moving abroad. We pulled back from that, and we really want to make sure that our launch in, first, in Czech and later in Slovakia are highly successful. And success for me means not just that we've got all the bits and pieces that more or less work, but actually the Czech customers like us. And so I think that is an area that we will really be focusing a lot of attention, and we'll probably also be doing a number of things to sort of test initial reaction before the official launch sometime next year.

And then yes, I confirm we also want to -- we've had fabulous feedback with the buy now, pay later products, several of them. And we know that there's interest with our customers to shop -- to use still more of those sorts of financial orientated products. And we'll be working out what those actually will be, of course, also doing some work around the balance sheet. So I think overall, those are 3 things.

I think there's, if you will, within the day job of let's sort of say it's more functionally orientated stuff. Advertising is obviously something else that we'd want to do. But that roughly is, I think, our to-do list at the highest level.

And as I also said before, I think often, this is an issue of concentrating effort and making sure that you actually deliver the tangible results that you set out to do, which may mean do fewer things may be very conservative at first to make sure it actually manage well. Do you want to do the...

[Jonathan Eastick, executive]

Yes, I'll do the second one of Lisa's questions. Yes. So you're right, Lisa, when we announced the results on a preliminary basis, we mentioned that July, I think, had produced a mid-20s growth rate, which is the case. We're actually tracking quite close to that in September. But for some reason, August was a bit lower. And a main component of that was actually one of our main PPC partners made some adjustments to its algorithm, which, not for a long period of time, but for a couple of weeks, had some impact on the efficiency of our PPC spending and the amount of GMV that it was bringing in for the business. So it was a bit of a technical factor, but it did contribute to the performance in August, yes. So we're expecting to be over 20% for the quarter as a whole.

And I can't tell you what October is going to look like. As I was saying, we are worried about whether or not the whole situation is going to catch up with the consumer in the fourth quarter. If you've been tracking Polish retail versus some of the other countries in the region, you'll know that it's been pretty robust up until now, but it is starting to have some signs of slowing. And bearing in mind that the fourth quarter is effectively like 4 months rather than 3 because of the Christmas shopping season. And because so much of that spending is really discretionary, we need to be cautious. This is why we've taken down the top end of the guidance.

[Roy Perticucci, executive]

Okay. So I'll take over and do the last one, Lisa. I think the other question you asked -- your fourth question was regarding the Mall brand. And I would say it's actually the Mall brand. I think primarily in addition to Mall.cz, there's also CZC and then also a number of regional brands for some of the other markets in which Mall trades.

[Jonathan Eastick, executive]

[indiscernible] very strong in Slovenia is the third one.

[Roy Perticucci, executive]

Thank you. I knew that was roughly that. I didn't trust myself to actually pronounce it clearly. So -- and I think the answer to that is, yes, we will continue to use those brands. At a very minimum, it will be as a merchant presence within the Allegro marketplace. So CZC or Mall now actually sort of making their offers on the Allegro marketplace website. But I think we also need to look closely what we're going to do in terms of the existing trading sites. And my personal view here is that we need to follow what customers prefer. If customers continue to enjoy shopping on these other websites, then we will follow their preferences.

[Lisa Yang, analyst]

Actually, if I just follow up quickly. You obviously coming from a logistic background, but it doesn't -- you didn't really highlight fulfillment and locker rollout as a key priority.

[Roy Perticucci, executive]

I did actually. I said within interaction of, I think, the SMART! proposition as a whole. And I think this is overall, yes -- logistics, sort of -- I think you're asking sort of creating logistics of our own. And I'd say it's within the fact that our largest single cost block on the income statement is logistics -- is trans cost. And so that implies that we continue to work with our existing carriers, maybe add on a few, although there's not a huge number of large logistics players in the Polish market, or for that matter, elsewhere in the 5 other countries that we trade in. And over and above that, we've made a huge jump. I think it's 2000 lockers and our own courier capability and FC capability. And again, the physical assets are only a portion of the logistics capability. The other portion of the capability is people and the knowledge of those people and the experience of those people have working with fast they have to hand. And I think that's where we've got an opportunity this year to get better and better what we've done.

Remember, we're still in baby shoes. This is, I think, the second year or the third year that we've been working with these capabilities. And I think it's always respectful of the challenge to make sure that you're all buttoned up before you make another major jump. And question for me is, we've built a successful business on being asset-light. And so developing our own capabilities about choices, about speed, reliability and cost. And as long as we have good choices from the market, that will also affect our speed or lack thereof in terms of further developing our own.

[Michal Kuzawinski, executive]

Thank you, Lisa. And now we have Lukasz Wachelko from Wood & Company.

[Lukasz Wachelko, analyst]

Actually, I have 3 on imports, a follow-up on Take Rate and on the SMART! subscription. So can we take them one by one?

[Roy Perticucci, executive]

Sure. Absolutely.

[Lukasz Wachelko, analyst]

In fact, I understand that if nothing happens and we have 3rd of November, the prices of deliveries by imports for you increased roughly by 15%. The other option is that you negotiate the deal offering higher volumes for them and allowing them to increase the prices by the smaller rates. What should we expect? Where are the negotiations going to? If you can shed any light here.

[Roy Perticucci, executive]

I really don't think it's fair, and for that matter, not even appropriate to sort of make comments about individual suppliers. I think we, by and large, over now decades, a number of our service providers have grown with us as we brought more and more e-commerce volume over to them. And I think that's been a highly complementary environment, as I said, over quite a long time. And I think our priority is to work with the carriers that we have as they struggle with their own rising prices. And again, I think we should not underestimate if you're in a transportation or logistics business. If your fuel costs have gone up by more than 50% in the better part of the year, then that's a major challenge for you. And what we need to do as a customer of those service providers is to work with them in terms of managing -- manage their own costs and the demands we put upon them.

And then I would sort of say in terms of financial planning, as the CFO has already mentioned, we've incorporated all the contractual implications of the contracts that we have into the financial plan.

[Lukasz Wachelko, analyst]

Okay. And on the Take Rate, historically, you targeted a Take Rate of 10%. Now you're already above it, you said. And well, longer-term targets, should we expect will the mark of 12 being exceeded or it's premature at this stage?

[Jonathan Eastick, executive]

Yes. Maybe I'll take that one because I've obviously got the history. Lukasz, yes, when we've talked historically about the 10% level, that was in the context of when the Take Rate only included the element of the commission that we charge on the transactions to the merchants. And at that point in time, there was no cofinancing stream of revenues, yes. So I think it was about January of 2021, if I recall, was when we first started charging any cofinancing. And it's -- essentially, it's the cofinancing element, which is pushing the rate up above the 10% level, yes. So obviously, we have a huge amount of investment that we do on behalf of our merchants, both around financing the free delivery, but also bringing traffic to their offers in terms of marketing and PPC spending. And we're giving them tremendous value for money in our view.

So -- but just you need to bear in mind that the cofinancing is part of that KPI. It's not purely the commission on the transactions.

[Lukasz Wachelko, analyst]

Okay. And the last one, we've seen this year Amazon increasing [Audio Gap] across some markets in Europe and [indiscernible] from roughly 49 to 69 depending on the currency. Would you consider increasing the prices of SMART! subscription or given the price elasticity, it makes no sense according to your vision here?

[Roy Perticucci, executive]

Sorry, you clipped out with the question regarding Amazon and the prime offer price, but I think it was more than we heard here.

[Lukasz Wachelko, analyst]

Well, can you hear me?

[Jonathan Eastick, executive]

Yes. There was just a 2-second break in the middle of the question.

[Lukasz Wachelko, analyst]

So very sorry for that. So again, well, Amazon this year increased prices of prime subscription on many markets. Your price PLN 49 is with us for a long time. We have inflation. The MOV of PLN 40 is fairly low. Should we expect or do you consider increasing the cost of prime SMART! subscription or increasing the MOV for the free delivery?

[Roy Perticucci, executive]

Sure. What I would say here is that I wouldn't want to preannounce any changes to our SMART! offer, or for that matter, make any sort of comparisons to my former employer and what they're doing. I think you're right. I think overall, we're in a high inflation environment. Everyone's costs are going up. And for us, I think it's a very important decision to work out when and how and whether for that matter we want to affect our customers who, quite frankly, are in a period that's particularly challenging.

[Michal Kuzawinski, executive]

Thank you, Lukasz. And now we'll move on to Michal Potyra from UBS.

[Michal Potyra, analyst]

I have 4, but 2 should be very straightforward. So the first question is about your guidance for EBITDA margin inflection. So my question is, should we expect that to continue in 2023 as well? So I'm really wondering, has the margin bottomed already? So that's the first question.

The second question is about Allegro Pay as a strategic investment. And you mentioned monetization of Allegro Pay. If you can give a little bit more color on that, please.

The third question very straightforward. If you could give us some color on the unit cost of cross-border delivery to the Czech Republic because I understand that's going to be a big part of Allegro CZ at the beginning.

And the fourth question is about your return rate. If you can give us some numbers here and what is the trend in your return rate.

[Roy Perticucci, executive]

It kind of sort of feels like Jon, it's like you for 1 and 4 and me for 2 and 3. What do you want to do, 3...

[Jonathan Eastick, executive]

Yes, can be. Sure. Let me take one [indiscernible]. I can go through all of them, and you just have to supplement if there's anything you want to...

[Roy Perticucci, executive]

Sure. Okay.

[Jonathan Eastick, executive]

Yes. Okay. So starting with the guidance, we don't have anything specific to say about 2023. As I said, we put the numbers under review, as I said on the final slide. There's no doubt about the direction of travel, right? You've heard from Roy that we're going to be very focused on transport costs and our own operational costs and prioritizing the number of initiatives that we're working on at a single point in time. And that obviously should feed through into our rate of cost growth. But it's a little bit too early to put all the different elements of the planning together and especially with the amount of uncertainty that we're facing right now that I was mentioning as well to give you an insight in exactly which direction that margin is going to move next year. But we'll come back early in Q1 as we always do with the fourth quarter results and with a much clearer view. And we may have some updates as well during the Q3 announcement in 2 months' time. So that's the first one.

On Allegro Pay, we're actually monetizing quite well around the installment loans. The price of installment loans has actually moved up to an APR of close to 20%, which -- and we're still finding significant demand for those loans. We're also, over time, going to be looking at monetizing a little bit more around BNPL. Nothing to announce at this point in time, but there are various opportunities there, particularly when customers are not able to pay down those interest-free loans within the initial term. So that will come later. Those are the main monetization opportunities there that we see short term.

The third question on cross-border. It was one of the streams of work that I mentioned on the integration slide. We are working with various options for doing the cross-border delivery. We won't announce anything until -- probably until we actually launched the platform, then we'll explain exactly how we're going about it.

And then the fourth question, the return rate. Our return rate generally is actually pretty low. Obviously, it varies between categories, but it's a mid-single-digit return rate, and that's fully deducted in our GMV numbers as well. We don't show GMV gross of returns. It's net of returns.

[Michal Potyra, analyst]

Just a last bit about the return rate. Is there -- are there any changes over the last couple of years? Or is it pretty stable?

[Jonathan Eastick, executive]

It is actually pretty stable. It maybe fluctuates 1 -- most 1 or 2 percentage points up and down, but it's really very slow.

[Michal Kuzawinski, executive]

Thank you, Michal. And now we have questions from Piotr Lopaciuk from PKO Banku Polskiego.

[Piotr Lopaciuk, analyst]

I have one question concerning the new or renewed local marketplace initiatives, I mean, [indiscernible]. At least in their statements, they seem to be quite aggressive in terms of the benefits they will try to offer to the merchants. Do you think that it can be some serious challenge competitor threat for you or rather you disregard this -- yes. And is it the environment for increasing monetization if at least, I guess, behind both of these initiatives, there are some financial strength, at least moderate strength? So could you elaborate on this?

[Jonathan Eastick, executive]

Yes, Piotr, I'll take that one. I must admit the moves that those 2 players have made have not been brought to my attention or to Roy and the executive team's attention by the Commerce team. So I would assume that, that means they're not too concerned about those, but I'll ask Michal to look into it and maybe come back to you with a more detailed answer after the call.

I think it's maybe an opportune moment just to update the audience on one of the players that we do monitor very closely, which is obviously Shopee. They've been, as we all know, very aggressive in terms of their commercial positioning when they launched back in September of last year. And they're now one year or so into their journey. They've already made about -- I think we're up now to the third round of monetization adjustments. So they started charging for delivery. They started charging their merchants. And their take rates are starting to move up relatively close to Allegro's own take rates. So that's one that we are watching closely.

And given the relatively low traction that we think they've accomplished with that really aggressive initial launch positioning, we're quite happy to see that they're already moving in some monetization, even though they haven't really taken very much GMV as far as we can tell.

[Michal Kuzawinski, executive]

Thank you, Piotr. And with that, our time is going to close. Thank you all for attending our call for your interest and the many questions you've asked, and see you on the 24th of November to discuss our Q3 results. Goodbye.

[Roy Perticucci, executive]

Thanks very much.

[Jonathan Eastick, executive]

Thank you very much. Take care.