WEBVTT 1 00:00:07.545 --> 00:00:10.095 Hello and welcome to this educational film 2 00:00:10.625 --> 00:00:14.615 which is devoted to the very well known lo of jungle, 3 00:00:14.705 --> 00:00:17.135 which is eat or be eaten. 4 00:00:18.205 --> 00:00:20.895 This food chain perspective is going to be illustrated 5 00:00:21.035 --> 00:00:24.455 by the acquisition of delivery by DoorDash, 6 00:00:25.665 --> 00:00:30.015 which industry It's about on demand delivery at large. 7 00:00:30.805 --> 00:00:34.015 It's going to be about food from restaurants, about grocery, 8 00:00:34.285 --> 00:00:36.495 from supermarkets, grocery stores 9 00:00:36.635 --> 00:00:39.895 or whatsoever it's done by the bicycle 10 00:00:40.275 --> 00:00:42.455 or by drones flying everywhere. 11 00:00:43.115 --> 00:00:46.855 And basically this is a very old business which has been 12 00:00:46.885 --> 00:00:50.655 massively disrupted by internet obviously 13 00:00:50.755 --> 00:00:54.215 and emergence of platforms on internet so 14 00:00:54.215 --> 00:00:56.015 that you can share the information 15 00:00:56.355 --> 00:00:59.095 and you can optimize the delivery itself. 16 00:01:00.125 --> 00:01:04.015 Basically, it's one of the segments which have been Uberized 17 00:01:04.925 --> 00:01:07.215 with the name of Uber, as you know, 18 00:01:07.475 --> 00:01:11.135 and Uber Eats is a very important player in this business 19 00:01:11.615 --> 00:01:12.775 together with DoorDash. 20 00:01:13.495 --> 00:01:15.575 DoorDash makes very important 21 00:01:16.095 --> 00:01:18.455 announcement on the 6th of May this year, 22 00:01:19.155 --> 00:01:21.855 the company is going to acquire delivery. 23 00:01:22.575 --> 00:01:24.935 DoorDash is predominantly in North America. 24 00:01:25.245 --> 00:01:27.415 Deliveroo is predominantly in Europe, 25 00:01:27.955 --> 00:01:30.215 so there won't be any major problem in terms 26 00:01:30.215 --> 00:01:32.015 of antitrust legislation. 27 00:01:32.755 --> 00:01:36.055 The price is 2.9 billion sterling pounds 28 00:01:36.055 --> 00:01:40.095 because Deliveroo is listed on the London Stock Exchange, 29 00:01:40.095 --> 00:01:43.215 which represents about $3.9 billion 30 00:01:43.275 --> 00:01:44.975 and it's going to be paid in cash. 31 00:01:45.645 --> 00:01:48.535 It's not a stock transaction, it's cash out, 32 00:01:49.075 --> 00:01:52.455 but it's not the only announcement made on 6th of May 33 00:01:52.525 --> 00:01:56.095 because DoorDash will make another acquisition whose name 34 00:01:56.155 --> 00:01:57.535 is seven rooms. 35 00:01:58.115 --> 00:02:01.655 It has nothing to do with supply chain organization 36 00:02:01.715 --> 00:02:04.135 of the delivery clients or whatsoever. 37 00:02:04.605 --> 00:02:06.855 It's about technology, it's about software, 38 00:02:07.125 --> 00:02:10.575 it's about online booking, so you understand 39 00:02:10.575 --> 00:02:14.615 that the company is growing, is investing quite a lot, 40 00:02:15.075 --> 00:02:18.215 and at the end of the day it's capitalizing on customer's 41 00:02:18.215 --> 00:02:21.535 portfolio together with user experience. 42 00:02:22.155 --> 00:02:23.815 The price, which is going to be paid 43 00:02:23.995 --> 00:02:27.855 by DoorDash is $1.2 billion against in cash. 44 00:02:28.505 --> 00:02:32.535 3.8, 3.9 plus 1.2 is about five point. 45 00:02:32.595 --> 00:02:34.055 So saying no problem, 46 00:02:34.315 --> 00:02:37.295 the company had the monnet in the bank account. 47 00:02:37.875 --> 00:02:39.375 The price which is going to be paid 48 00:02:39.375 --> 00:02:41.415 by DoorDash is 1.8 pounds. 49 00:02:42.205 --> 00:02:45.095 It's about uh, 180 pe. 50 00:02:46.035 --> 00:02:49.535 It shows a premium of 44% against the last stock price, 51 00:02:49.635 --> 00:02:52.295 and you see that on the graph immediately. 52 00:02:52.295 --> 00:02:56.815 The stock price is going to adjust to 180 minus a time lag 53 00:02:56.815 --> 00:02:58.655 between the moment the announcement is made 54 00:02:58.835 --> 00:03:00.965 and the moment it's going to be actually packed. 55 00:03:00.965 --> 00:03:02.925 Though the markets are absolutely 56 00:03:03.015 --> 00:03:05.125 validating it's going to work. 57 00:03:05.495 --> 00:03:09.325 There will be no problem in the antitrust legislation 58 00:03:09.385 --> 00:03:11.405 and authorities management 59 00:03:11.905 --> 00:03:14.085 and basically there will be no counter offer 60 00:03:14.085 --> 00:03:15.165 from competitors. 61 00:03:15.595 --> 00:03:19.325 This is another story DoorDash was created in 62 00:03:19.625 --> 00:03:21.445 2013. 63 00:03:22.065 --> 00:03:25.325 The first name is palo alto delivery.com 64 00:03:25.785 --> 00:03:28.045 and it's going to be created by people living 65 00:03:28.145 --> 00:03:29.445 around Palo Alto. 66 00:03:29.765 --> 00:03:31.325 Students at the University of Stanford 67 00:03:31.855 --> 00:03:34.085 whose names are respectively, Mr. 68 00:03:34.465 --> 00:03:36.765 Sue, Mr. Tang and Mr. Fong. 69 00:03:37.145 --> 00:03:39.405 So you probably imagine where they come from. 70 00:03:40.025 --> 00:03:42.445 The company is going to be immediately accepted 71 00:03:42.665 --> 00:03:45.445 by this fantastic and very well-known accelerator, 72 00:03:45.445 --> 00:03:47.045 which is Y Combinator. 73 00:03:47.725 --> 00:03:50.205 Y Combinator is providing services against equity. 74 00:03:50.315 --> 00:03:52.605 They're going to take 7% of equity 75 00:03:52.985 --> 00:03:55.725 and it's going to be immediately renamed 76 00:03:56.005 --> 00:03:57.685 DoorDash a few years later. 77 00:03:57.745 --> 00:04:01.565 In 2018, the number one in the US market is grab her. 78 00:04:02.485 --> 00:04:03.805 I will discuss a little bit later. 79 00:04:04.025 --> 00:04:07.445 Number two, DoorDash and number three, Uber Eats. 80 00:04:08.065 --> 00:04:09.565 So this is quite successful 81 00:04:09.745 --> 00:04:14.285 and it is so successful as the year after in 2019. 82 00:04:15.065 --> 00:04:18.325 Now DoorDash is number one with a market share 83 00:04:18.425 --> 00:04:21.325 of 28% in the United States. 84 00:04:21.785 --> 00:04:25.925 United States is about 95% of the revenues of DoorDash. 85 00:04:26.635 --> 00:04:29.965 This is why in 2020 using, 86 00:04:30.185 --> 00:04:31.965 if I may say COVID 87 00:04:32.225 --> 00:04:35.405 and the momentum behind COVID, the company is going 88 00:04:35.405 --> 00:04:39.445 to be listed initial public offering in 2020, 89 00:04:40.665 --> 00:04:41.955 it's going to be a success. 90 00:04:42.215 --> 00:04:45.515 Why? Because DoorDash is a commercial success. 91 00:04:45.575 --> 00:04:47.155 The company is skyrocketing in terms 92 00:04:47.155 --> 00:04:49.475 of revenues and because of COVID. 93 00:04:50.565 --> 00:04:54.555 COVID created an opportunity for companies like DoorDash, 94 00:04:54.865 --> 00:04:57.075 like Zoom because it was the ability 95 00:04:57.175 --> 00:04:58.915 to keep on running the business 96 00:04:59.215 --> 00:05:01.915 and have a normal quote, life 97 00:05:02.465 --> 00:05:05.075 without too much interacting between people. 98 00:05:05.775 --> 00:05:08.955 The IPO takes place in 2020 in December, 99 00:05:09.255 --> 00:05:13.315 but in June the company made its last offer in terms 100 00:05:13.335 --> 00:05:18.235 of private equity issue of shares, private series H, 101 00:05:18.775 --> 00:05:20.955 and at that time, the premo evaluation 102 00:05:20.955 --> 00:05:25.075 of the company is just a little bit beyond $15 billion. 103 00:05:25.935 --> 00:05:28.315 In December, the IPO is going 104 00:05:28.315 --> 00:05:31.635 to evaluate the company at $71 billion. 105 00:05:32.145 --> 00:05:34.755 It's tremendous increase in six months time. 106 00:05:35.535 --> 00:05:39.595 The price which is offered for the IPO is $102 per share. 107 00:05:40.095 --> 00:05:43.595 The opening price is going to be 182, 108 00:05:44.255 --> 00:05:46.875 but the market likes very much a company. 109 00:05:47.425 --> 00:05:50.115 Then there will be some fluctuations during this day 110 00:05:50.455 --> 00:05:54.795 and the closing price is going to be 189.5. 111 00:05:55.535 --> 00:05:59.205 So this is definitely a tremendous success as far 112 00:05:59.205 --> 00:06:00.925 as capital markets are concerned. 113 00:06:01.785 --> 00:06:04.565 If you look at the evolution of the revenues of DoorDash, 114 00:06:04.865 --> 00:06:06.765 you have the commercial success. 115 00:06:07.565 --> 00:06:10.205 Skyrocketing growth is absolutely huge. 116 00:06:10.205 --> 00:06:13.765 You remember what I said in 20 18, 20 19, 117 00:06:13.945 --> 00:06:16.525 the market share is about 30%. 118 00:06:16.635 --> 00:06:19.965 It's going to grow from 28% to today, 119 00:06:20.335 --> 00:06:23.005 67%, so two thirds 120 00:06:23.005 --> 00:06:26.325 of the American market are in the hands of DoorDash, 121 00:06:26.335 --> 00:06:27.685 which is huge growth. 122 00:06:28.465 --> 00:06:30.965 Of course, you see the growth, which is a linear growth, 123 00:06:31.105 --> 00:06:34.485 but in relative terms it is slowing down 124 00:06:35.025 --> 00:06:36.445 quotes a little bit, 125 00:06:37.065 --> 00:06:38.805 but 2024 as opposed 126 00:06:38.805 --> 00:06:42.325 to 2023 shows an increase in the revenues 127 00:06:42.425 --> 00:06:44.045 by 25%. 128 00:06:44.635 --> 00:06:47.405 When we compare that with delivery in a few minutes time, 129 00:06:47.435 --> 00:06:49.725 it's going to be a completely different story. 130 00:06:50.105 --> 00:06:52.205 Now, the good news when you generate revenues 131 00:06:52.345 --> 00:06:54.725 and growing revenues is that you are going 132 00:06:54.725 --> 00:06:56.045 to generate economies of scale. 133 00:06:57.015 --> 00:07:00.165 Costs are fixed, variable jury speaking, 134 00:07:00.405 --> 00:07:02.405 a little bit semi fixed and semi variable. 135 00:07:03.345 --> 00:07:05.845 The good news is when your revenues are growing 136 00:07:05.845 --> 00:07:08.125 and your costs are growing in absolute terms, 137 00:07:09.025 --> 00:07:12.485 but at a rate which is less than the growth in the revenues, 138 00:07:12.585 --> 00:07:15.725 and then you increase your cost by in absolute terms, 139 00:07:16.105 --> 00:07:18.085 but relative to revenues, it's down 140 00:07:18.225 --> 00:07:21.205 and it's a very nice way to reach breakeven 141 00:07:21.385 --> 00:07:22.925 and operating profitability. 142 00:07:23.885 --> 00:07:25.965 DoorDash is providing some information 143 00:07:25.965 --> 00:07:27.205 about its operating expenses. 144 00:07:27.775 --> 00:07:31.365 First we have the cost of sales, the cost of delivering, 145 00:07:31.505 --> 00:07:33.765 the cost of producing the goods 146 00:07:33.765 --> 00:07:35.845 and services which are sold to the customer. 147 00:07:36.225 --> 00:07:39.045 It first goes down and then it stabilizes once in 148 00:07:39.045 --> 00:07:40.285 infrastructure is set. 149 00:07:40.665 --> 00:07:42.685 That's the way it works. General 150 00:07:42.825 --> 00:07:45.805 and admin is down gradually down 151 00:07:45.805 --> 00:07:49.645 because you need less people per dollar. 152 00:07:49.825 --> 00:07:51.965 Of course, if you need one accountant to account 153 00:07:51.985 --> 00:07:55.205 for a certain level of revenue, if you multiply 154 00:07:55.345 --> 00:07:57.405 by two the revenue generated by the company, 155 00:07:57.505 --> 00:07:59.005 you don't need two accountants. 156 00:07:59.065 --> 00:08:00.805 You are going to generate economies of scale, 157 00:08:01.105 --> 00:08:03.245 so you need 1.7, 1.8. 158 00:08:03.385 --> 00:08:06.485 You increase the number of people working in a general 159 00:08:06.585 --> 00:08:10.565 and admin, but relative to revenue is down gradually down. 160 00:08:11.565 --> 00:08:12.685 Interestingly, research 161 00:08:12.705 --> 00:08:16.365 and development, very often you have a kind of two phases. 162 00:08:16.825 --> 00:08:19.325 The first one is you start running the business. 163 00:08:19.325 --> 00:08:21.045 You have massively invested in research 164 00:08:21.045 --> 00:08:23.365 and development to be a market leader, 165 00:08:23.825 --> 00:08:27.605 and then you start amortizing your research and development. 166 00:08:27.905 --> 00:08:29.045 That's absolutely fair. 167 00:08:29.045 --> 00:08:30.405 You generate economies of scale, 168 00:08:30.825 --> 00:08:31.965 but then you are the leader. 169 00:08:32.145 --> 00:08:33.725 You have fantastic market share 170 00:08:33.725 --> 00:08:35.925 and you want to remain at the head of the market. 171 00:08:36.235 --> 00:08:37.645 Then what do you have to do? 172 00:08:37.945 --> 00:08:40.485 You have to invest in innovation in order 173 00:08:40.545 --> 00:08:42.925 to improve your algorithm, in order 174 00:08:43.025 --> 00:08:45.325 to improve your optimization user 175 00:08:45.335 --> 00:08:46.925 experience and things like that. 176 00:08:47.435 --> 00:08:51.405 This is why sometimes it stabilizes and goes up again 177 00:08:51.665 --> 00:08:53.845 or stabilizes and is plus minus, 178 00:08:54.225 --> 00:08:58.285 but you have to keep on investing in innovation if you want 179 00:08:58.285 --> 00:08:59.445 to remain the leader. 180 00:09:00.185 --> 00:09:01.845 That's about the investment together 181 00:09:01.845 --> 00:09:04.205 with the capital expenditures, which are a consequence 182 00:09:04.225 --> 00:09:05.685 of growing the revenue. 183 00:09:06.485 --> 00:09:08.525 Interestingly, there's a cost item which is very often 184 00:09:08.525 --> 00:09:10.525 generating massive economies of scale. 185 00:09:10.545 --> 00:09:14.805 It sits on marketing, very simple reason at first, 186 00:09:14.905 --> 00:09:17.605 you attract customers, so you have to pay 187 00:09:17.605 --> 00:09:19.765 for the customer acquisition cost 188 00:09:20.265 --> 00:09:22.325 and it's going to cost you quite a lot of money, 189 00:09:22.945 --> 00:09:25.565 but then once the customers love your product, 190 00:09:26.105 --> 00:09:28.405 you don't have to acquire them anymore, you have 191 00:09:28.405 --> 00:09:32.845 to retain them, and the retention costs are always much more 192 00:09:32.845 --> 00:09:34.645 work than the acquisition cost 193 00:09:35.025 --> 00:09:36.885 and this is why the company is generating 194 00:09:37.625 --> 00:09:41.685 as any successful company in terms of client attractiveness, 195 00:09:42.385 --> 00:09:44.325 lot of economies of scale. 196 00:09:44.835 --> 00:09:47.205 This will have an impact on the operating profit. 197 00:09:47.825 --> 00:09:50.445 Now, the consequence of generating economies 198 00:09:50.445 --> 00:09:53.805 of scale in a growing company is that the profit, 199 00:09:54.065 --> 00:09:56.045 the operating profit is going to be up. 200 00:09:56.675 --> 00:09:59.245 It's absolutely dramatic at the beginning of the period 201 00:09:59.705 --> 00:10:02.885 and then what's going to happen 2020 when the company goes 202 00:10:02.885 --> 00:10:05.205 public, we are close to breakeven. 203 00:10:06.065 --> 00:10:10.885 The EBITDA is not positive, the EBIT is not positive, 204 00:10:11.065 --> 00:10:14.005 but the adjusted EBITDA is just a breakeven. 205 00:10:14.545 --> 00:10:16.845 You remember that the difference between EBIT 206 00:10:16.845 --> 00:10:18.645 and EBITDA is deci precision 207 00:10:18.645 --> 00:10:20.965 and amortization, which is a non-cash item, 208 00:10:21.625 --> 00:10:23.485 but when you calculate your ebitda, 209 00:10:23.745 --> 00:10:25.525 the accounting authorities, they ask you 210 00:10:25.525 --> 00:10:28.245 to take into account the stock based compensation, 211 00:10:28.845 --> 00:10:30.965 restricted stock units, stock options 212 00:10:31.025 --> 00:10:32.725 and so on so forth to treat that 213 00:10:32.945 --> 00:10:36.365 as an operating expenses in the calculation of the ebitda, 214 00:10:36.835 --> 00:10:40.325 they are expense, but these are non cash items, 215 00:10:40.945 --> 00:10:43.285 but at the end of the day, if you want to calculate a kind 216 00:10:43.285 --> 00:10:46.525 of really cash operating profit, it's going 217 00:10:46.605 --> 00:10:47.845 to be adjusted EBITDA 218 00:10:48.105 --> 00:10:52.445 and adjusted EBITDA is a breakeven in 2020, in 21, 219 00:10:52.825 --> 00:10:57.125 and in 22 in 23 it's going to dramatically go up 220 00:10:57.705 --> 00:10:59.125 and in 24 it's up 221 00:10:59.425 --> 00:11:03.125 and if you look at the first semester of 25, again, it's up. 222 00:11:05.665 --> 00:11:09.265 Interestingly, the EBITDA taking into account stock-based 223 00:11:09.265 --> 00:11:12.865 compensation is going to go to breakeven in 2023 224 00:11:13.245 --> 00:11:16.625 and the EBIT is going to BRE even in 2024. 225 00:11:16.925 --> 00:11:18.745 So you understand that there is a momentum 226 00:11:18.965 --> 00:11:22.705 and a momentum is you increase the return on sales 227 00:11:23.265 --> 00:11:25.145 dramatically each and every year. 228 00:11:26.045 --> 00:11:29.025 The other point is are you able with your profit 229 00:11:29.565 --> 00:11:32.225 to finance your growth when you grow, you have 230 00:11:32.225 --> 00:11:33.825 to invest in capital expenditures. 231 00:11:33.895 --> 00:11:35.385 It's not only property, plant 232 00:11:35.385 --> 00:11:38.105 and equipment, it's also software development, 233 00:11:38.135 --> 00:11:41.225 capitalized software development, and then you invest. 234 00:11:41.885 --> 00:11:44.105 What's going to happen at DoorDash, 235 00:11:44.635 --> 00:11:47.385 CapEx is down at the very beginning. 236 00:11:47.565 --> 00:11:49.105 You have to build infrastructure 237 00:11:49.565 --> 00:11:51.225 and then progressively capital 238 00:11:51.225 --> 00:11:52.865 expenditures are going to be down. 239 00:11:53.295 --> 00:11:57.085 Again, not in absolute terms, but relative to revenues. 240 00:11:57.425 --> 00:12:00.325 Now, if you look at the graph, capital expenditures are down 241 00:12:00.705 --> 00:12:05.445 as a percentage to revenues, four, 3%, something like that. 242 00:12:05.945 --> 00:12:08.045 In the meantime, while CapEx is down, 243 00:12:08.405 --> 00:12:09.685 adjusted a bit dies up. 244 00:12:10.385 --> 00:12:14.325 So interestingly, adjusted EBITDA is at breakeven in 245 00:12:14.325 --> 00:12:18.365 20, 21, 22, but it does not pay the CapEx. 246 00:12:18.985 --> 00:12:21.925 You can calculate EBITDA minus CapEx. 247 00:12:22.225 --> 00:12:25.165 Now, I prefer to calculate EBITDA divided 248 00:12:25.385 --> 00:12:26.565 by capital expenditures. 249 00:12:27.225 --> 00:12:29.765 How many times you pay your capital expenditures 250 00:12:29.805 --> 00:12:31.485 with your cash operating profit 251 00:12:32.145 --> 00:12:35.925 and interestingly it's going to become more than one, 252 00:12:36.265 --> 00:12:41.085 so ebitda definitely paying the capital expenditures in 2023 253 00:12:41.385 --> 00:12:43.645 and it's going to go up in 2024. 254 00:12:44.235 --> 00:12:47.125 Then the capital is generating an adjusted ebitda. 255 00:12:47.135 --> 00:12:48.845 Again, cash operating profit, 256 00:12:49.175 --> 00:12:52.165 which pays five times the capital expenditures, 257 00:12:52.745 --> 00:12:55.485 but you understand that you have an extremely virtual circle 258 00:12:55.785 --> 00:12:58.005 now because you generate a free cash flow, 259 00:12:58.005 --> 00:12:59.485 which is positive, you don't have 260 00:12:59.485 --> 00:13:01.245 to visit your shareholders each 261 00:13:01.245 --> 00:13:04.845 and every year to accumulate equity in order to pay 262 00:13:05.185 --> 00:13:06.845 for the losses and in order to pay 263 00:13:06.965 --> 00:13:09.205 for the capital expenditures, the gross, 264 00:13:10.265 --> 00:13:11.485 and that's very important 265 00:13:11.485 --> 00:13:13.605 because if you are free, cash flow is positive. 266 00:13:13.835 --> 00:13:17.005 What do you do with the money? There are two alternatives. 267 00:13:17.505 --> 00:13:20.085 You retain and invest your returns. 268 00:13:20.085 --> 00:13:22.125 That's what we are going to observe for delivery 269 00:13:22.865 --> 00:13:25.405 if few financial metrics about the balance sheet 270 00:13:25.465 --> 00:13:27.085 of DoorDash balance sheet, 271 00:13:27.105 --> 00:13:30.325 you remember the accounting statements assets on the one 272 00:13:30.325 --> 00:13:32.645 hand, equity and liabilities on the other hand, 273 00:13:32.905 --> 00:13:34.445 we find those people, we transform 274 00:13:34.445 --> 00:13:37.245 that into capital employed net operating assets 275 00:13:37.745 --> 00:13:39.405 and net financial resources. 276 00:13:39.505 --> 00:13:42.005 The net operating assets are predominantly made 277 00:13:42.025 --> 00:13:43.885 of long term assets 278 00:13:44.945 --> 00:13:47.445 and working capital requirements. 279 00:13:47.675 --> 00:13:51.845 Long-term assets is about 4.6 billion out 280 00:13:51.845 --> 00:13:53.805 of which you have a little bit of property plant 281 00:13:53.805 --> 00:13:57.005 and equipment obviously, but you have some goodwill 282 00:13:57.345 --> 00:14:01.485 and intangible assets which are very much a consequence 283 00:14:01.665 --> 00:14:03.085 of acquisitions. 284 00:14:03.675 --> 00:14:04.845 It's 2.8 billion, 285 00:14:05.345 --> 00:14:09.405 so 4.6 is 2.8 plus 1.8. 286 00:14:10.065 --> 00:14:13.125 It is about again, property, plant and equipment. 287 00:14:13.125 --> 00:14:15.005 The working capital requirement is made 288 00:14:15.005 --> 00:14:18.845 of in factories plus accounts receivable minus everything 289 00:14:18.845 --> 00:14:21.445 which is payable to operating stakeholders. 290 00:14:21.795 --> 00:14:24.885 There's no in factor discount business, it's pure service. 291 00:14:25.785 --> 00:14:27.685 Now you have some accounts with receiv well, 292 00:14:27.825 --> 00:14:31.205 but what is due to the stakeholders, the restaurants, 293 00:14:31.345 --> 00:14:35.925 the grocery stores, the dashers represent 2.2 billion. 294 00:14:36.195 --> 00:14:39.205 This is why the working character requirement is strongly 295 00:14:39.845 --> 00:14:41.445 negative by 3 billion. 296 00:14:42.205 --> 00:14:43.765 Interestingly, when you grow you have 297 00:14:43.765 --> 00:14:45.325 to finance your capital expenditures, 298 00:14:45.545 --> 00:14:47.725 but you also have to find out the growth in your working 299 00:14:47.725 --> 00:14:48.765 capital requirement, 300 00:14:48.985 --> 00:14:51.245 but when it's negative, if you grow, 301 00:14:51.435 --> 00:14:52.765 it's even more negative. 302 00:14:53.105 --> 00:14:55.685 The consequence is that the working capital requirement 303 00:14:56.405 --> 00:15:00.285 increase in absolute term is going to be a resource 304 00:15:00.545 --> 00:15:02.205 and not a use of funds. 305 00:15:03.105 --> 00:15:07.605 Now, 4.6 minus three is 1.6. This is cap employed. 306 00:15:08.265 --> 00:15:10.685 In front of that you have the net financial resources, 307 00:15:10.805 --> 00:15:13.725 a contribution of investors as a financing as a company. 308 00:15:14.235 --> 00:15:16.805 It's made of shareholders and financial creditors. 309 00:15:16.805 --> 00:15:19.445 Shareholders equity is 7.8, 310 00:15:19.945 --> 00:15:22.045 so it's much more than 1.6. 311 00:15:22.625 --> 00:15:25.765 Why? Because a net financial that the financial, that net 312 00:15:25.765 --> 00:15:28.765 of cash is strongly a negative. 313 00:15:28.825 --> 00:15:32.685 In fact, the company has much more cash than debt. 314 00:15:33.155 --> 00:15:35.965 Cash is exceeding debt by more than 6 billion. 315 00:15:36.355 --> 00:15:38.085 This is why when you do your shopping 316 00:15:38.225 --> 00:15:41.805 and you pay 5 billion, the money is in the bank account. 317 00:15:43.045 --> 00:15:46.085 Interestingly, shareholders equity is a contribution 318 00:15:46.465 --> 00:15:49.845 and the assets owned by the shareholders in the company, 319 00:15:49.985 --> 00:15:54.085 if I may say it's made of capital, additional paid capital 320 00:15:54.425 --> 00:15:56.685 and accumulated retain earnings, 321 00:15:57.345 --> 00:15:59.325 but retain earnings might be negative, 322 00:15:59.455 --> 00:16:03.245 especially when the company is starting its operations. 323 00:16:03.945 --> 00:16:05.765 Now if you take the example of DoorDash, 324 00:16:05.765 --> 00:16:10.125 shareholders equity is about 13.1 billion invested 325 00:16:10.705 --> 00:16:13.045 by the shareholders in the company 326 00:16:13.825 --> 00:16:17.525 before the company is listed, the debt company is listed 327 00:16:18.335 --> 00:16:20.685 minus the losses which were AC accumulated 328 00:16:20.705 --> 00:16:23.285 by the company in the first years of operations, 329 00:16:23.335 --> 00:16:26.205 which represent $5.3 billion. 330 00:16:26.905 --> 00:16:30.045 Of course, 7.8 minus 6.2 is 1.6. 331 00:16:30.345 --> 00:16:33.205 Net financial resources are matching with capital employed. 332 00:16:33.475 --> 00:16:37.435 This is accounting. Now, this was a balance sheet. 333 00:16:37.435 --> 00:16:39.715 Let's have a look at the profit and loss statement. 334 00:16:40.195 --> 00:16:43.595 Revenues in 20 24, 10 0.7 billion. 335 00:16:44.655 --> 00:16:47.435 Now if you divide the revenues by the capital employed, 336 00:16:47.495 --> 00:16:50.435 you get the assets turnover, the asset productivity, 337 00:16:50.725 --> 00:16:52.915 which we use in the DuPont and move formula. 338 00:16:53.215 --> 00:16:55.435 You remember, return capital is 339 00:16:55.655 --> 00:16:57.075 how much you make when you sell, 340 00:16:57.495 --> 00:17:00.435 but applied by how many times you generate revenues 341 00:17:00.485 --> 00:17:04.955 equivalent to invested capital assets to an over a 6.7, 342 00:17:04.965 --> 00:17:07.955 which is 10.7 divided by 1.6. 343 00:17:08.535 --> 00:17:12.035 Return on sales in 2024 is near the return. 344 00:17:12.035 --> 00:17:13.915 Capital is nearly obviously, 345 00:17:14.335 --> 00:17:19.155 but first semester 2025, the return on sales is 5%. 346 00:17:19.575 --> 00:17:22.315 If you multiply 5%, assuming that it's going 347 00:17:22.315 --> 00:17:24.315 to be the return sales for the whole year 348 00:17:24.615 --> 00:17:27.035 by the assets turnover, which is more than six, 349 00:17:27.415 --> 00:17:29.955 you get the return capital, which is going 350 00:17:29.955 --> 00:17:31.515 to be more than 30%. 351 00:17:31.745 --> 00:17:35.515 Then the company is by far paying its cost of capital. 352 00:17:36.055 --> 00:17:38.475 The company is generating a positive economic profit. 353 00:17:38.615 --> 00:17:40.155 The performance is positive. 354 00:17:40.975 --> 00:17:43.555 The growth or the value, which is a value of 355 00:17:43.555 --> 00:17:47.755 what you transport from the point of sale to the delivery 356 00:17:48.295 --> 00:17:50.565 is $47 billion. 357 00:17:51.045 --> 00:17:53.445 Interestingly, the adjusted EBITDA 358 00:17:53.445 --> 00:17:56.885 during the first semester again is one point 25 billion. 359 00:17:56.985 --> 00:18:00.165 If you divide one by the other, you get an EBITDA 360 00:18:00.685 --> 00:18:04.085 adjusted divided by growth order value, which is 2.6%. 361 00:18:04.995 --> 00:18:08.365 It's service. It's not huge margins 362 00:18:08.745 --> 00:18:11.085 but with a very high asset turnover, 363 00:18:11.465 --> 00:18:15.085 it can give you a return capital, which is extremely good 364 00:18:15.225 --> 00:18:18.405 and by far exceeding the weighted average cost of capital. 365 00:18:19.505 --> 00:18:21.685 Now, what is a consequence of that story 366 00:18:21.865 --> 00:18:24.325 and those matrix on the usual stock price, 367 00:18:25.245 --> 00:18:28.665 the companies listed on stock exchange in December 20. 368 00:18:29.455 --> 00:18:31.545 This is absolutely a success, 369 00:18:31.965 --> 00:18:35.025 but then there will be a post COVID period which is going 370 00:18:35.025 --> 00:18:38.145 to be dramatic for a number of companies and NASDAQ is down 371 00:18:38.525 --> 00:18:40.465 and DoorDash is very much down. 372 00:18:40.655 --> 00:18:45.585 It's going to get to a low point in 2022 at about 50 from 373 00:18:45.645 --> 00:18:49.945 200 down to 50, and then the NASDAQ is up 374 00:18:50.325 --> 00:18:52.105 and then DoorDash is up. 375 00:18:52.645 --> 00:18:54.625 The market capitalization of the company. 376 00:18:54.845 --> 00:18:58.065 The date is listed is you remember $71 billion. 377 00:18:58.635 --> 00:19:03.425 Today it's more than 110 billion, so there is a kind 378 00:19:03.425 --> 00:19:06.265 of additional market value added for the company, 379 00:19:06.355 --> 00:19:08.345 which is $40 billion. 380 00:19:08.805 --> 00:19:11.585 So it has been a good deal for the investors. 381 00:19:12.895 --> 00:19:16.665 It's about value creation. Why do you create value? 382 00:19:17.085 --> 00:19:18.905 Not because you are growing but 383 00:19:18.905 --> 00:19:21.425 because your growth is performing. 384 00:19:22.165 --> 00:19:24.425 Now you observe that their revenues were growing 385 00:19:24.885 --> 00:19:26.545 and the return capital employed, 386 00:19:26.545 --> 00:19:30.985 which was 0% in 2024 is now more than 30%, 387 00:19:31.325 --> 00:19:34.985 so it's not gross against profitability, it's growth 388 00:19:35.285 --> 00:19:36.305 for profitability, 389 00:19:36.925 --> 00:19:39.785 and then you are going to accelerate your profitability 390 00:19:40.055 --> 00:19:41.705 with a growth in your revenues. 391 00:19:41.955 --> 00:19:43.265 Again, it's about economies 392 00:19:43.265 --> 00:19:46.065 and scale, which is a perfect story for a company 393 00:19:46.445 --> 00:19:48.225 and that is about profitable. 394 00:19:48.575 --> 00:19:49.865 When you're experiencing 395 00:19:49.965 --> 00:19:52.865 and generating a profitable growth, you create value. 396 00:19:53.815 --> 00:19:55.505 Then if you want to calculate, 397 00:19:55.615 --> 00:19:58.265 observe the value which is created a stock market, 398 00:19:58.555 --> 00:20:00.105 there are different ratios. 399 00:20:00.285 --> 00:20:03.065 One which I very much use is a market to book, 400 00:20:03.065 --> 00:20:06.265 which is a price value divided by capital employed. 401 00:20:06.725 --> 00:20:08.905 The price value is market capital debt 402 00:20:09.165 --> 00:20:11.105 and capital employed is the amount 403 00:20:11.105 --> 00:20:13.265 of money you invest in your business operations, 404 00:20:13.885 --> 00:20:18.305 but capital employed is not that relevant for this kind 405 00:20:18.305 --> 00:20:20.025 of business because it's quite low. 406 00:20:20.415 --> 00:20:23.345 It's not very much capital intensive by far. 407 00:20:23.535 --> 00:20:26.145 Sometimes you can use a price to book, 408 00:20:26.165 --> 00:20:29.705 so you take the market cap divided by the book equity, 409 00:20:29.805 --> 00:20:33.065 but in the book equity you have not only what was invested 410 00:20:33.165 --> 00:20:34.345 by the shareholders, 411 00:20:34.645 --> 00:20:37.905 but also you have a few things like treasury stock, 412 00:20:38.455 --> 00:20:41.225 like losses, exactly for DoorDash, 413 00:20:41.525 --> 00:20:44.145 but what I prefer is to calculate the price to capital. 414 00:20:44.935 --> 00:20:46.705 Capital is what was invested 415 00:20:46.725 --> 00:20:48.565 by the shareholders throughout the years 416 00:20:48.865 --> 00:20:50.965 and you remember it is 13.1. 417 00:20:51.505 --> 00:20:53.605 Now the value is 111. 418 00:20:53.705 --> 00:20:58.285 If you divide 111 by 13.1, you get 8.5, 419 00:20:58.575 --> 00:21:00.445 which means that on the average, each 420 00:21:00.445 --> 00:21:01.525 and every dollar invested 421 00:21:01.545 --> 00:21:06.005 by the shareholders in the company was multiplied by 8.5. 422 00:21:06.315 --> 00:21:07.765 This is value creation 423 00:21:07.945 --> 00:21:11.205 and this is a perfect consistency between performance, 424 00:21:11.505 --> 00:21:12.885 growth and value. 425 00:21:13.795 --> 00:21:17.725 This does not go without a little bit of legal issues, 426 00:21:17.895 --> 00:21:21.725 which were always observed as far as Uberization 427 00:21:22.235 --> 00:21:24.125 processes were observed. 428 00:21:24.865 --> 00:21:28.445 One is about labor relations, employee status. 429 00:21:29.265 --> 00:21:32.285 Are they employed of the company? Are they independent? 430 00:21:32.285 --> 00:21:35.285 Don't you understand that in terms of social security 431 00:21:35.385 --> 00:21:37.645 and a few things like that, it might have an 432 00:21:37.645 --> 00:21:39.245 importance remuneration. 433 00:21:39.865 --> 00:21:43.805 Is there any minimum remuneration? What about the ties? 434 00:21:43.805 --> 00:21:44.805 What about the tips? 435 00:21:45.105 --> 00:21:47.365 How are they shared within the company, et cetera. 436 00:21:47.465 --> 00:21:52.165 Plenty of problem cartel antitrust, GrubHub 437 00:21:52.545 --> 00:21:56.525 and Uber is and DoorDash are dominant on the US market 438 00:21:56.625 --> 00:21:58.765 and the antitrust authorities consider that. 439 00:21:59.235 --> 00:22:02.485 It's not exactly fair the way the companies are 440 00:22:02.485 --> 00:22:03.605 running the business. 441 00:22:04.075 --> 00:22:06.525 Sometimes DoorDash is accused 442 00:22:06.545 --> 00:22:09.165 of registering restaurants again, their will 443 00:22:09.625 --> 00:22:12.165 and then misappropriating orders. 444 00:22:12.695 --> 00:22:14.325 There is a very interesting example 445 00:22:14.425 --> 00:22:16.365 of a restaurant which did not want 446 00:22:16.365 --> 00:22:17.805 to be registered by DoorDash. 447 00:22:17.825 --> 00:22:21.485 It was registered by DoorDash on the platform of the company 448 00:22:22.185 --> 00:22:23.605 and when the clients they wanted 449 00:22:23.625 --> 00:22:26.485 to order something from the restaurants, DoorDash will say, 450 00:22:26.485 --> 00:22:28.125 no, no, it's too far from where you live, 451 00:22:28.305 --> 00:22:30.845 but by the way, we have another restaurant which is much 452 00:22:30.845 --> 00:22:31.965 closer to where you live 453 00:22:32.225 --> 00:22:36.245 and now they were redirecting the orders from the 454 00:22:36.525 --> 00:22:37.805 restaurant, which did not want 455 00:22:37.965 --> 00:22:41.125 to be DoorDash register into another restaurant which was 456 00:22:41.125 --> 00:22:42.445 paying the fees for DoorDash. 457 00:22:42.715 --> 00:22:44.405 It's absolutely illegal. 458 00:22:45.145 --> 00:22:47.125 It was also about illegal sales 459 00:22:47.225 --> 00:22:49.085 of data, et cetera, et cetera. 460 00:22:49.105 --> 00:22:52.085 You know that Uber, DoorDash, et cetera, 461 00:22:52.435 --> 00:22:56.205 they are not exactly um appropriate in terms 462 00:22:56.385 --> 00:22:58.925 of compliance with legal issues. 463 00:22:59.745 --> 00:23:02.765 Now, the target deliver story, 464 00:23:02.905 --> 00:23:07.165 the company starting 2013 is starting in United States. 465 00:23:07.265 --> 00:23:10.605 It is in Europe. United Arab ate 466 00:23:11.245 --> 00:23:14.445 a little bit in Asia through Singapore and Hong Kong. 467 00:23:14.905 --> 00:23:16.805 Do you understand? There is absolutely no 468 00:23:16.805 --> 00:23:18.205 overlap in terms of business. 469 00:23:18.425 --> 00:23:20.685 The DoorDash buys delivery is not going 470 00:23:20.685 --> 00:23:24.405 to change the competition in Europe, so no problem. 471 00:23:24.665 --> 00:23:28.525 The competitors are just e takeaway and Uber Eats. 472 00:23:29.225 --> 00:23:30.925 In 2021, the company is listed. 473 00:23:30.985 --> 00:23:33.165 You remember it was 24 DoorDash 474 00:23:33.905 --> 00:23:38.525 and the IPO stock price offer is 3.9 starting 475 00:23:38.525 --> 00:23:42.725 pounds, but it's not going to be as nice as 476 00:23:43.285 --> 00:23:48.165 DoorDash because now the stock price is closing at 2.84, 477 00:23:48.625 --> 00:23:52.845 so it's not going to be a success on an IPO point of view. 478 00:23:53.555 --> 00:23:56.885 They will have the same comparable legal problems, 479 00:23:57.695 --> 00:24:00.445 legal relation, antitrust and so on and so forth. 480 00:24:00.445 --> 00:24:02.165 They have even a client. 481 00:24:02.735 --> 00:24:05.165 There is even a problem which had not been experienced 482 00:24:05.165 --> 00:24:06.405 likely by DoorDash. 483 00:24:06.545 --> 00:24:09.125 One day a deliverable client is beaten. 484 00:24:09.665 --> 00:24:12.085 Um, it's not very good in terms of uh, 485 00:24:12.405 --> 00:24:13.605 UX and things like that. 486 00:24:14.105 --> 00:24:17.725 Now, the market share for DoorDash in the US is 68% 487 00:24:18.465 --> 00:24:19.685 for uk, France 488 00:24:19.785 --> 00:24:22.445 and Italy, which has dominant markets of deliver 489 00:24:22.475 --> 00:24:24.165 because of competition. 490 00:24:24.705 --> 00:24:27.005 The market share is around 30%, 491 00:24:27.785 --> 00:24:29.045 but you understand that you have 492 00:24:29.045 --> 00:24:30.685 to fight against big players 493 00:24:31.185 --> 00:24:33.965 and if you want to fight, you have to attract customers. 494 00:24:34.225 --> 00:24:36.085 If you want to attract customers, you have 495 00:24:36.085 --> 00:24:39.165 to improve the Euro experience and then you have to invest. 496 00:24:40.835 --> 00:24:45.045 What about the revenues generated by deliver skyrocketing? 497 00:24:45.645 --> 00:24:47.725 A nice increase Today it's about 2 billion. 498 00:24:47.995 --> 00:24:49.725 It's not the same size as 10 billion, 499 00:24:49.825 --> 00:24:52.005 but it's not the same geography as well. 500 00:24:52.385 --> 00:24:53.885 But what is very interesting is 501 00:24:53.885 --> 00:24:55.325 that if you look at the last three years, 502 00:24:55.465 --> 00:24:56.765 growth is out of the picture. 503 00:24:57.345 --> 00:25:00.845 It was a little bit closer to zero 504 00:25:01.445 --> 00:25:05.565 positive in 2022 and it's near in 23 and 24. 505 00:25:05.625 --> 00:25:07.885 Do you understand that growth is really 506 00:25:07.905 --> 00:25:09.045 an issue for the company? 507 00:25:09.235 --> 00:25:11.205 This is when the last presentation made 508 00:25:11.205 --> 00:25:12.525 to the financial analysis. 509 00:25:12.825 --> 00:25:15.445 The company says, oh, orders are back to growth. 510 00:25:15.955 --> 00:25:19.685 Outstanding growth. The number of orders growing by 2%. 511 00:25:20.505 --> 00:25:22.765 The gross order value, the value of 512 00:25:22.765 --> 00:25:26.845 what you are delivering is increased by 6%. 513 00:25:27.065 --> 00:25:29.725 So if the gross order value is up by 6% 514 00:25:30.065 --> 00:25:33.405 and the number of orders are by 2%, it means that the value 515 00:25:33.405 --> 00:25:36.605 of what you are delivering is up by 4%, 516 00:25:37.465 --> 00:25:40.765 but the company mentions in a small line that the 4% 517 00:25:41.345 --> 00:25:42.605 is definitely inflation. 518 00:25:43.345 --> 00:25:46.725 So what is growing your revenues is not really 519 00:25:46.795 --> 00:25:48.085 what people are buying, 520 00:25:48.455 --> 00:25:50.445 using your service and so on and so forth. 521 00:25:50.515 --> 00:25:54.085 It's just inflation, which is growing the revenues, which is 522 00:25:54.645 --> 00:25:55.965 absolutely not recommended. 523 00:25:57.655 --> 00:26:00.715 Of course a company generated the column is a scale 524 00:26:00.815 --> 00:26:04.555 and could reduce the cost per the company does not say very 525 00:26:04.555 --> 00:26:06.795 much about the indirect cost. 526 00:26:06.855 --> 00:26:09.475 You remember for DoorDash, we have displays sales 527 00:26:09.535 --> 00:26:12.995 and marketing, we have general admin, R 528 00:26:12.995 --> 00:26:14.195 and d and so on so forth. 529 00:26:14.615 --> 00:26:17.955 As far as delivery is concerned, we just have cost of sales 530 00:26:18.015 --> 00:26:20.915 and the other indirect cost, it's down 531 00:26:21.455 --> 00:26:24.035 and it's stabilizing for a very simple reason, 532 00:26:24.035 --> 00:26:26.155 which is the company is not growing. 533 00:26:26.535 --> 00:26:29.435 So you can improve your productivity, reducing your cost. 534 00:26:29.785 --> 00:26:31.635 It's going to improve a little bit the picture, 535 00:26:31.975 --> 00:26:35.035 but it's not very much the increase in the revenues, 536 00:26:35.035 --> 00:26:37.435 which is reducing your cost per revenue. 537 00:26:38.345 --> 00:26:41.035 When you observe the evolution of EBIT ebitda, 538 00:26:41.035 --> 00:26:44.885 an adjusted ebitda, you have roughly less the same track. 539 00:26:45.545 --> 00:26:48.285 So it's very strongly negative at the very beginning 540 00:26:48.285 --> 00:26:51.165 of the period for Deliveroo as it was for DoorDash 541 00:26:51.705 --> 00:26:55.045 and you are progressively getting to break even, 542 00:26:55.825 --> 00:26:57.125 but it's much slower 543 00:26:57.625 --> 00:27:02.085 and when you look at the evolution, you are EBITDA 544 00:27:02.465 --> 00:27:06.325 and adjusted EBITDA breakeven in online 23 545 00:27:06.785 --> 00:27:09.565 and 24 is just a little bit positive, 546 00:27:10.025 --> 00:27:12.845 but definitely it's not the same cost structure. 547 00:27:12.995 --> 00:27:14.565 It's not the same return on sales. 548 00:27:14.945 --> 00:27:16.845 So you understand that for DoorDash, 549 00:27:17.185 --> 00:27:20.325 the momentum is up for delivery. 550 00:27:20.585 --> 00:27:23.005 The momentum is a little bit more stable. 551 00:27:24.955 --> 00:27:26.255 Now, when you make a profit, 552 00:27:26.755 --> 00:27:28.975 you transform this profit into cash flow. 553 00:27:29.355 --> 00:27:32.335 You are a bid die positive, adjusted or not, 554 00:27:32.635 --> 00:27:34.455 and you have to pay your capital expenditures 555 00:27:34.555 --> 00:27:37.295 and you have to finance your working capital requirement. 556 00:27:37.315 --> 00:27:40.095 The good news is a working capital requirement is negative 557 00:27:40.555 --> 00:27:43.255 for delivery and for DoorDash, no problem. 558 00:27:44.085 --> 00:27:46.135 It's essential. It is kind of business 559 00:27:46.315 --> 00:27:48.335 and then you are going to generate a positive 560 00:27:48.595 --> 00:27:49.855 EBITDA minus CapEx. 561 00:27:50.165 --> 00:27:52.655 Then your free cash flow is positive when you generate 562 00:27:52.815 --> 00:27:53.855 a positive free cash flow. 563 00:27:53.855 --> 00:27:56.655 What do you do with the money you retain 564 00:27:57.075 --> 00:27:58.735 and invest your return? 565 00:27:59.035 --> 00:28:01.375 And then OO is very proud to announce 566 00:28:01.445 --> 00:28:05.295 that in 2024 it's a first year of positive free cash flow. 567 00:28:05.435 --> 00:28:08.655 And what do they do with Monet? They buy back their share. 568 00:28:09.285 --> 00:28:10.455 They don't pay dividends 569 00:28:10.455 --> 00:28:11.975 because they accumulated plenty of losses, 570 00:28:12.355 --> 00:28:14.655 so they're returning the cash to the shareholders. 571 00:28:15.165 --> 00:28:19.735 More than 100 million starting pound in 2024. 572 00:28:20.365 --> 00:28:23.015 When the company is announcing the outlook in terms 573 00:28:23.015 --> 00:28:26.815 of growth and ebitda, the company is saying, oh, we are back 574 00:28:26.815 --> 00:28:30.975 to growth ball, single digit, high single digit, 575 00:28:30.975 --> 00:28:35.095 but single digit adjusted EBITDA is going to increase, 576 00:28:35.555 --> 00:28:37.855 but if you increase the EBITDA in order 577 00:28:37.915 --> 00:28:39.775 to increase the return to the shareholders, 578 00:28:40.445 --> 00:28:42.855 it's not extremely bright in terms 579 00:28:42.955 --> 00:28:44.495 of future for the company. 580 00:28:44.845 --> 00:28:48.215 When you benchmark the operating profit generated 581 00:28:48.315 --> 00:28:53.095 by DoorDash and deliver, interestingly it's quite the same. 582 00:28:53.275 --> 00:28:56.815 If you look at the EBIT itself, quite same level 583 00:28:56.995 --> 00:28:58.135 of operat income. 584 00:28:58.675 --> 00:29:01.015 Now they are breakeven in 2024, 585 00:29:01.355 --> 00:29:03.295 but there is no dramatic difference. 586 00:29:03.555 --> 00:29:08.055 The difference is in the adjusted ebitda, DoorDash wins 587 00:29:08.195 --> 00:29:11.735 by a very wide margin against Deliveroo 588 00:29:12.195 --> 00:29:15.895 and then what does Deliveroo do with its ebitda? 589 00:29:16.115 --> 00:29:20.415 It returns the cash. What does DoorDash do with ebitda? 590 00:29:20.875 --> 00:29:24.175 It invests. That's a completely different philosophy. 591 00:29:24.355 --> 00:29:25.775 Now let's try to correlate that 592 00:29:25.775 --> 00:29:27.095 with the original stock price. 593 00:29:27.515 --> 00:29:29.255 You remember what I said with DoorDash, 594 00:29:29.645 --> 00:29:33.455 fantastic IPO then down stabilization up. 595 00:29:33.645 --> 00:29:34.815 What about the competitors? 596 00:29:34.875 --> 00:29:39.135 The competitors are Deliveroo obviously, which is down 597 00:29:39.515 --> 00:29:40.575 and remains down. 598 00:29:40.715 --> 00:29:43.445 Oh, it's up during the last weeks. Why? 599 00:29:43.555 --> 00:29:45.565 Because DoorDash is making an offer, 600 00:29:46.065 --> 00:29:49.845 but without the offer of DoorDash it would remain flat. 601 00:29:50.675 --> 00:29:55.445 Maan in China, same story, just a takeaway, same story. 602 00:29:55.785 --> 00:29:57.285 The only winner in terms 603 00:29:57.285 --> 00:30:00.525 of shareholder value creation over the long term is 604 00:30:00.525 --> 00:30:02.205 definitely DoorDash. 605 00:30:03.775 --> 00:30:06.875 And now if you compare the stock market trajectories 606 00:30:06.875 --> 00:30:09.275 of all these companies, you understand that 607 00:30:09.275 --> 00:30:14.075 for the period DoorDash is plus 50% deliver roof 608 00:30:14.295 --> 00:30:16.355 and Mayan eight minus 60. 609 00:30:16.575 --> 00:30:19.555 Of course for deliver its minus 60 plus 20 610 00:30:19.785 --> 00:30:22.195 because of the offer made by DoorDash, 611 00:30:22.495 --> 00:30:25.235 but without the offer it would have been minus 60 612 00:30:26.155 --> 00:30:29.275 delivery hero just in takeaway minus 80. 613 00:30:30.055 --> 00:30:31.555 So you understand that the one 614 00:30:31.655 --> 00:30:33.555 and unique company which is creating value 615 00:30:33.555 --> 00:30:38.355 for its shareholders is by far DoorDash, as I just said, 616 00:30:38.355 --> 00:30:39.675 DoorDash has competitors. 617 00:30:40.025 --> 00:30:43.195 Deliveroo, we already discussed delivery Hero, 618 00:30:43.945 --> 00:30:45.915 just e takeaway and may try. 619 00:30:46.495 --> 00:30:49.565 Let's take a few minutes to discuss these competitors 620 00:30:49.785 --> 00:30:53.645 and their respective power delivery hero is a tremendous 621 00:30:53.675 --> 00:30:54.685 revenue growth, 622 00:30:55.375 --> 00:30:57.845 tremendous success in a commercial point of view. 623 00:30:58.385 --> 00:31:01.765 Now, the company we started from very low a few years ago is 624 00:31:01.765 --> 00:31:05.245 now at more than 12 billion euros of turnover. 625 00:31:05.905 --> 00:31:09.575 Global prisons, Europe, middle East 626 00:31:09.575 --> 00:31:12.815 and North Africa, Asia, Americas, 627 00:31:12.815 --> 00:31:14.455 north America, Latin America. 628 00:31:15.075 --> 00:31:17.015 The company is still generating losses, 629 00:31:17.595 --> 00:31:19.615 but the company is now positive in terms 630 00:31:19.755 --> 00:31:21.695 of free cash flow generation. 631 00:31:22.395 --> 00:31:25.455 So the company is generating these economies of scale, 632 00:31:25.455 --> 00:31:27.455 which are not high enough to reach break even, 633 00:31:27.875 --> 00:31:31.135 but the company is very big, is very successful, 634 00:31:31.675 --> 00:31:34.135 and now is not consuming cash anymore, 635 00:31:34.625 --> 00:31:37.095 which makes the company much more powerful in the 636 00:31:37.095 --> 00:31:39.595 competitive game process. 637 00:31:40.055 --> 00:31:41.675 Uh, process was not on the list. 638 00:31:41.675 --> 00:31:44.395 Process was indirectly on the list. 639 00:31:45.175 --> 00:31:49.155 The company has been created from Naspers, which is a very 640 00:31:49.815 --> 00:31:51.955 big investor in South Africa. 641 00:31:52.735 --> 00:31:56.315 Nasper decided to list separately on the Amsterdam stock 642 00:31:56.715 --> 00:32:00.515 exchange its investment arm, which was named process 643 00:32:01.415 --> 00:32:05.475 and now Naspers has 73.1% of process. 644 00:32:05.525 --> 00:32:08.115 Definitely the controlling interest by far 645 00:32:08.665 --> 00:32:10.475 process is very well known 646 00:32:11.095 --> 00:32:14.435 for its equity stake in Tencent today. 647 00:32:14.455 --> 00:32:17.915 The company holds 23.5% of Tencent. 648 00:32:18.175 --> 00:32:22.395 It was 45% in 2001, so it was 649 00:32:22.975 --> 00:32:25.315 in the early league of the shareholders 650 00:32:25.415 --> 00:32:28.475 and founders of the company, which was a tremendous success. 651 00:32:29.125 --> 00:32:33.835 Today, the value of the 23.5% is still holding in Tencent 652 00:32:34.055 --> 00:32:36.915 is $155 billion. 653 00:32:38.035 --> 00:32:40.530 Interestingly, when you look at the market capitalization 654 00:32:40.530 --> 00:32:44.365 of process, it's less, it's about $130 billion. 655 00:32:44.745 --> 00:32:47.725 So you understand that the stock market capitalization 656 00:32:47.725 --> 00:32:50.965 of the company is much less at this net asset value. 657 00:32:51.705 --> 00:32:54.565 You have at least one asset which is worth significantly 658 00:32:54.715 --> 00:32:56.645 more than the value of all the assets 659 00:32:57.665 --> 00:33:00.125 in the other assets held by process. 660 00:33:00.465 --> 00:33:03.365 You have 28% of delivery. 661 00:33:03.535 --> 00:33:06.045 Hello, you have 4% 662 00:33:06.145 --> 00:33:08.725 of MA value in the delivery business. 663 00:33:08.775 --> 00:33:13.565 Again, you have 100% of food which is based in Brazil. 664 00:33:13.795 --> 00:33:15.605 Same business. Same business. 665 00:33:16.295 --> 00:33:18.685 Wiggy in India, which was recently listed, 666 00:33:19.105 --> 00:33:21.445 the company holds 25%. 667 00:33:22.145 --> 00:33:25.605 So the company is very much in a global presence 668 00:33:26.225 --> 00:33:28.085 and is a significant players 669 00:33:28.115 --> 00:33:30.445 through different equity stakes. 670 00:33:31.365 --> 00:33:35.325 Interestingly, a few years ago in 2020 process wanted 671 00:33:35.465 --> 00:33:39.765 to buy, just eat for 5.5 billion pounds 672 00:33:40.545 --> 00:33:43.565 and in fact just it was acquired by takeaway 673 00:33:43.625 --> 00:33:47.685 and it became just eat takeaway in 2021, 674 00:33:47.715 --> 00:33:52.565 just eat takeaway bought GrubHub for $7.3 billion. 675 00:33:52.825 --> 00:33:57.525 You remember the one which was number one when DoorDash was 676 00:33:57.555 --> 00:34:01.885 only number two, but GrubHub was a disaster 677 00:34:02.705 --> 00:34:05.045 and what was acquired in 21 678 00:34:05.265 --> 00:34:08.685 for $7.3 billion is sold by Jesse 679 00:34:09.205 --> 00:34:13.365 Takeaway in 2024 for only $650 million. 680 00:34:13.875 --> 00:34:15.285 It's a dramatic loss. 681 00:34:16.115 --> 00:34:21.005 Then interestingly now process is by just in takeaway 682 00:34:21.385 --> 00:34:26.085 for $4.3 billion, so much less than what was paid 683 00:34:26.105 --> 00:34:28.725 by just takeaway to buy GrubHub. 684 00:34:28.825 --> 00:34:29.925 That's a terrible story. 685 00:34:30.025 --> 00:34:32.445 So processes buying just a takeaway, 686 00:34:32.615 --> 00:34:37.085 which is a significant shareholder of delivery Herald, 687 00:34:37.665 --> 00:34:39.125 that's going to be a problem 688 00:34:39.585 --> 00:34:41.005 and this is why in order 689 00:34:41.025 --> 00:34:44.645 to get the agreement from the antitrust authorities at the 690 00:34:44.645 --> 00:34:46.805 level of Europe, there will be partial 691 00:34:47.425 --> 00:34:52.005 or total sale of the delivery hero stake held by process. 692 00:34:52.655 --> 00:34:53.765 We'll see how it works, 693 00:34:54.425 --> 00:34:56.125 but you understand that process 694 00:34:56.785 --> 00:34:58.685 is an extremely strong company. 695 00:34:59.155 --> 00:35:02.245 They want cash to sell a few Tencent shares. 696 00:35:02.245 --> 00:35:05.525 So there the company has about $18 billion 697 00:35:05.625 --> 00:35:07.085 of cash in the bank account. 698 00:35:07.555 --> 00:35:10.085 It's a considerable financial power. 699 00:35:11.235 --> 00:35:14.075 Interestingly, the company was created in South Africa, 700 00:35:14.575 --> 00:35:16.635 but the company is in Brazil. 701 00:35:17.115 --> 00:35:20.275 Haifu, the company is in India, Sweden, 702 00:35:20.975 --> 00:35:23.195 the company is in China, Mayan, 703 00:35:23.935 --> 00:35:28.795 and now the company is in Europe with just a takeaway 704 00:35:29.015 --> 00:35:30.275 and delivery hero. 705 00:35:30.525 --> 00:35:31.555 Maybe, maybe not. 706 00:35:32.175 --> 00:35:36.195 If you combine Brazil, India and China 707 00:35:36.415 --> 00:35:39.965 and South Africa, you get something which is a little bit 708 00:35:40.065 --> 00:35:41.165 of the bricks 709 00:35:41.805 --> 00:35:44.925 'cause this is definitely a bricks company 710 00:35:45.715 --> 00:35:46.805 excluding Russia. 711 00:35:49.035 --> 00:35:52.615 If you look at May one now, may one was created in 2010 712 00:35:52.915 --> 00:35:55.735 by a gentleman who is still there, CEO 713 00:35:55.815 --> 00:35:57.175 of the company, Wong Singh. 714 00:35:57.485 --> 00:36:02.055 This is also a big player, 2024 market capitalization, 715 00:36:02.555 --> 00:36:06.255 $95 billion formula return, 716 00:36:06.255 --> 00:36:09.095 capital return on sales times assets, turnover. 717 00:36:09.435 --> 00:36:10.975 The assets turnover is only to your, 718 00:36:11.215 --> 00:36:13.375 remember it's six point something for DoorDash, 719 00:36:13.875 --> 00:36:17.175 but the e eeb as a percentage revenue is significantly 720 00:36:17.275 --> 00:36:21.375 higher, 8%, two times eight is 16%. 721 00:36:21.645 --> 00:36:24.095 It's not a 30% rose of DoorDash, 722 00:36:24.395 --> 00:36:26.295 but the company is profitable 723 00:36:26.795 --> 00:36:31.015 and the adjusted EBITDA represents 13% of revenues 724 00:36:31.235 --> 00:36:34.655 and pays four times the capital expenditures. 725 00:36:35.265 --> 00:36:38.215 Again, free cash flow, strongly positive. 726 00:36:38.925 --> 00:36:41.655 What do you do when you generate a free cash flow, 727 00:36:41.655 --> 00:36:44.815 which is positive, you can try to extend locally, 728 00:36:45.995 --> 00:36:50.575 but Mayan holds a market share in China, which is 65%. 729 00:36:51.405 --> 00:36:55.375 Alibaba is the other big competitor with its own site, 730 00:36:55.435 --> 00:36:57.375 la.com with 30% 731 00:36:57.395 --> 00:37:00.855 and the rest of the crowd including jdi jd.com, 732 00:37:00.915 --> 00:37:03.535 so JD taker web plus others 5%. 733 00:37:04.355 --> 00:37:06.255 So you understand that it's a op poll. 734 00:37:06.575 --> 00:37:08.655 A DU poll is generally speaking much better 735 00:37:08.675 --> 00:37:10.615 for the shareholders and for the clients, 736 00:37:11.075 --> 00:37:14.655 and this is why there are some conflicts locally in China 737 00:37:14.965 --> 00:37:16.455 with the competition authorities, 738 00:37:16.545 --> 00:37:18.415 which qualify the relationship 739 00:37:18.415 --> 00:37:21.175 between these different actors as irrational. 740 00:37:21.845 --> 00:37:25.575 They also have some difficulties with uh, people delivery, 741 00:37:25.575 --> 00:37:29.695 people dispute treatment of labor relation, 742 00:37:30.405 --> 00:37:32.375 same story as the rest of the crowd, 743 00:37:32.875 --> 00:37:36.815 but Maan is using its free cash flow to develop, to grow. 744 00:37:37.485 --> 00:37:38.855 They are based in Beijing 745 00:37:39.315 --> 00:37:41.335 and they decided to grow in Hong Kong. 746 00:37:41.485 --> 00:37:43.455 It's not that far a different distance. 747 00:37:43.595 --> 00:37:47.935 As Saudi Arabia in, they are exploiting their 748 00:37:48.475 --> 00:37:49.815 new software Keita 749 00:37:50.555 --> 00:37:54.535 and in Brazil in May this year, the company announced 750 00:37:54.535 --> 00:37:58.375 that they were going to invest $1 billion over the years 751 00:37:58.715 --> 00:37:59.775 in order to develop. 752 00:38:00.075 --> 00:38:01.935 You see the signing of the agreement 753 00:38:02.035 --> 00:38:04.055 and you have two presidents. 754 00:38:04.635 --> 00:38:06.535 You have the CEO of Maan 755 00:38:06.955 --> 00:38:09.015 and a little bit in the back you have the 756 00:38:09.015 --> 00:38:10.455 president of Brazil. 757 00:38:11.235 --> 00:38:15.295 So again, when we are discussing bricks, you have Brazil 758 00:38:16.235 --> 00:38:17.255 and you have China. 759 00:38:17.755 --> 00:38:19.255 The links are stronger. 760 00:38:19.955 --> 00:38:23.895 Bricks is not unless something which is valid on the 761 00:38:24.015 --> 00:38:26.055 international political relationship. 762 00:38:26.725 --> 00:38:29.335 It's also in the business, in the economics, 763 00:38:29.435 --> 00:38:31.375 and it is stronger and stronger. 764 00:38:32.155 --> 00:38:36.085 Now, if we go back to the acquisition of Deru by DoorDash, 765 00:38:36.595 --> 00:38:37.965 what is a rationality? 766 00:38:38.385 --> 00:38:40.005 Is it in synergies? 767 00:38:40.465 --> 00:38:43.005 Of course you can pull some R and D expenses. 768 00:38:43.365 --> 00:38:46.045 R and d is very much about software development, 769 00:38:46.195 --> 00:38:47.205 user experience, 770 00:38:47.275 --> 00:38:50.205 algorithm optimization, et cetera, et cetera. 771 00:38:50.945 --> 00:38:55.605 And DoorDash is spending 1.2 billion in 2024, 772 00:38:55.755 --> 00:38:58.965 including half a billion in stock based compensation. 773 00:38:59.385 --> 00:39:01.005 So you've tried to consider 774 00:39:01.075 --> 00:39:05.205 that maybe all these software developments can be amortized 775 00:39:05.705 --> 00:39:06.965 in the delivery business. 776 00:39:07.535 --> 00:39:10.045 There may be also some brand synergies. 777 00:39:10.585 --> 00:39:14.125 You are stronger, you are worldwide, your customers, 778 00:39:14.125 --> 00:39:16.165 they know you everywhere, et cetera. 779 00:39:16.515 --> 00:39:19.165 Synergies in terms of tangible fixed assets, 780 00:39:19.795 --> 00:39:22.685 it's a little bit discussion, property, plant and equipment. 781 00:39:22.825 --> 00:39:24.805 Now the infrastructure is quite local. 782 00:39:25.475 --> 00:39:30.005 Economies of scale, maybe shared services, maybe lobbying 783 00:39:30.965 --> 00:39:33.325 stronger means more effective lobbying. 784 00:39:33.585 --> 00:39:35.165 That's certainly a synergy, 785 00:39:36.065 --> 00:39:37.245 and so you can consider 786 00:39:37.355 --> 00:39:40.245 that it's maybe an offensive acquisition 787 00:39:40.395 --> 00:39:43.725 because of synergies, economies, scale, and all the like, 788 00:39:44.265 --> 00:39:47.565 but it's also probably a very strongly 789 00:39:48.315 --> 00:39:49.805 defensive acquisition. 790 00:39:50.505 --> 00:39:52.325 You have to control the field, you have 791 00:39:52.325 --> 00:39:53.645 to control the operations. 792 00:39:54.235 --> 00:39:57.285 Deliveroo is weak. There's a monopoly. 793 00:39:57.465 --> 00:39:58.965 The company's a perfect target, 794 00:39:59.425 --> 00:40:01.565 and your competitors are strong. 795 00:40:01.955 --> 00:40:05.965 They are extremely wealthy in terms of financial structure 796 00:40:06.435 --> 00:40:09.125 because they are generating plenty of free cash flows 797 00:40:09.125 --> 00:40:10.125 and they want to grow 798 00:40:10.195 --> 00:40:13.245 because they have plenty of assets which they can sell. 799 00:40:13.355 --> 00:40:14.445 They have plenty of cash. 800 00:40:14.745 --> 00:40:18.245 So you are confronting extremely powerful competitors 801 00:40:18.825 --> 00:40:22.285 and then in that case you have to eat, you have to grow. 802 00:40:22.515 --> 00:40:25.765 Otherwise you might be eaten by your competitors. 803 00:40:27.015 --> 00:40:27.805 Thank you very much.