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Operator: Ladies and gentlemen, thank you for standing by. I am your Jota, your Chorus Call operator. Welcome, and thank you for joining Allegro Group Earnings Call and Live Webcast to present and discuss the second quarter 2025 results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Tomasz Pozniak, Investor Relations Director. Mr. Pozniak, you may now proceed.
Tomasz Pozniak: Thank you, Jota, and welcome to all participants of our call. Let me introduce the presenters of today. Marcin Kusmierz, the CEO of Allegro Group, who will provide you with the highlights of Allegro performance in Q2 and summarize the key takeaways; and Mr. Jon Eastick, our CFO, who will guide you through the financials for Q2 and update of the outlook for the full year 2025. As usual, our results presentation is available for download from our Investors web page at allegro.eu. You may also download the slides from the link available on the webcast screen. As a reminder, today's presentation and discussion contains forward-looking statements. Our actual results could differ materially from the expectations expressed in such statements. Please make sure you review the full disclaimer on Slide #2. Also please note this presentation and the Q&A session are being recorded and will be available for a replay on our website at allegro.eu. And with this, I would like to hand over to our CEO, Marcin. The floor is yours.
Marcin Kusmierz: Good morning. This is Marcin Kusmierz, CEO of the company. Thank you for introducing and welcoming the participants of today's conference call. At the beginning of our meeting, I would like to share the key financial and operating results achieved in the second quarter of 2025. Detailed information will be presented by Jon Eastick, our CFO, in the second part of the presentation. GMV on Allegro in Poland was close to 10% and more than twice as high than nominal growth in retail sales. We showed rapid growth compared to our competitors in the e-commerce industry as well as traditional retail chains. We exceeded 15 million active buyers, while also passed PLN 4,000 GMV per active buyer. Good results in GMV and increase in the number of buyers resulted in strong revenue growth over 18% year-on-year. Almost every part of our business developed well, but our advertising business line deserves special mention with over 30% growth year-over-year. It is also worth mentioning the take rate, which exceeded 13% in Poland and improved by nearly 5 percentage points. We see that we still have very good potential for further growth in Poland. For customers in Poland, Allegro is the first choice, and we are consistently building our position in the Central Eastern Europe. At the group level, GMV increased by 9%, which was influenced by continued optimization of the mall group. At the level of international marketplaces in CEE, we achieved excellent GMV growth and demonstrated Allegro's consistency in building a strong position as a regional leader. The number of active buyers in the group exceeded 21 million with GMV per active buyer increasing by over 4%. At the group level, our revenues grew by over 10%, again, with a good outlook for the future. Strong GMV growth and excellent revenue growth had a positive impact on adjusted EBITDA, which increased by 14% in Poland and by over 20% at the group level. Thanks to that, we are upgrading revenues and adjusted EBITDA outlook towards the top end of the range. We are constantly continuing our investments related to the development of the marketplace's functionality and making it even more attractive. We're also investing in the development of logistics infrastructure that supports the expansion of the Allegro delivery program. As a result, our CapEx expenses increased by 67% to over PLN 200 million. It's also worth mentioning the reduction in financial leverage, which was supported by strong free cash flow generation. Let me now present the 4 pillars of our development. These are the strategic directions, which we focused last couple of years. We are constantly investing in the development of the marketplace, our core business in both Poland and the CEE region, giving consumers the widest choice of products, ease of purchase and range of added services. We're also developing new growth drivers, which, on the one hand, strengthened our core business and on the other hand, build a long-term competitive advantage. They have a positive impact on the pace of our business development and make our business more diversified. I'm talking about advertising, financial services and logistics. With each quarter, we are growing stronger in the markets of Central Eastern Europe. Customers from Czechia, Slovakia and Hungary are increasingly shopping on Allegro, building relationships with us and taking advantage of our loyalty program. They increasingly treat us as one of the main places to buy products based on our wide selection and attractive prices. We want to continuously improve our value proposition for buyers and sellers in the region so that as in Poland, we are their first choice. We're also strengthening our foundations, technological business and human. We use a modern technological platform within the group, and we are building a culture focused on innovation and development. We are a company that invests in long-term growth and strengthening our market position. For a moment, I will focus on the value proposition we offer to buyers and sellers in Poland. We invest heavily in personalization and targeting products to the expectations of consumers and business customers. Allegro is a place where you can find the widest range high-quality branded products. We're constantly attracting new sellers to the platform. They represent almost all industries and business sizes. They are global corporations as well as local microenterprises and have perfect understanding of customer expectations and needs. When I joined Allegro a couple of months ago, we almost immediately started a discussion with the management team and the Board about the possibility of accelerating our growth and strengthening our market position. Allegro has almost everything it needs to conquer new market segments and attract new customer groups. It is the leading online shopping destination in Poland, and we see further prospects for strengthening our position. So we are analyzing the market and the attractiveness of investment in its individual segments. In the coming weeks or months, we will discuss and approve strategic areas for making potential investments with the Board. We have launched the process that we're calling accelerated evolution. Our ambition is to be the leading shopping destination for current customers and customers representing future generations. We want to be a platform that addresses customer expectations and needs and is a friendly ecosystem that supports the growth of our partners. Let's start by discussing the core marketplace and how we see opportunities for its growth in the future. We will certainly accelerate investments in the development of marketplace functionality. For 25 years, Allegro has been the first choice for buyers and sellers in Poland and Central Eastern Europe. We see potential in combining the functionality and added services of the 3P and 1P models, everything that is the best about that. The 3P model remains our foundation, and we do not plan to expand our own product range or maintain larger inventories. What inspires us in 1P and what we add to Allegro is sector expertise, consulting and even better product management. Now I will focus on the possibility of expanding our marketplace with new categories and market segments. The natural direction for the development of marketplace is expansion of product offering. We currently have over 80 million products, but we still see opportunities to add some new product categories, accelerate GMV growth and increase the frequency of purchases. We're also exploring possibility of cooperating with brands that they are not currently present in Poland and CEE to become a gateway for their market expansion. Services, a new area of interest for us. We're analyzing and looking with curiosity at the rapidly growing services segment in recent years. We're carefully looking at the segments with the largest market share and the greatest potential, both those that support the sales of products, financial services or insurance as well as those that are independent. Customers trust Allegro. They have great relationships with us, and they want to grow with us. So we believe that we will be able to create for them some new special unique value. The next point is potential externalization of services produced at Allegro as another area that could potentially support our growth. We're considering selling some services outside the marketplace. We create world-class products and following the example of global players, we're thinking about selling them in other parts of the market. Our Allegro Pay is the best buy now, pay later solution on the market. Our logistics infrastructure is the engine for the highest quality services. This is a potential opportunity to build relationships with the new groups of customers and sellers. We see a lot of interest and demand from merchants. We're talking with them about joint opportunities for growth, business development and new directions for expansion. Finally, our goal is to update our value proposition so that customers continue to see its uniqueness and fully appreciate its value. For clarity, I want to underline that presented directions of development are fully consistent with the current strategy and are still the subject of our analysis and consultations with the Board. We're constantly investing in improving our value proposition for buyers and sellers. In the first half of the year, we developed a shop-in-shop service combining the shopping experience known from 3P and 1P models. The solution has been recognized by regional and international brands such as Finish, HP, Inglot, Karcher or Pampers. The number of authorized sellers representing well-known brands has also increased significantly. Now we have over 3,000 of them on Allegro. Thanks to better management of AML and KYC processes by Allegro Finance, we have improved the merchant verification process. As a result, new merchants can start selling on Allegro much faster. As part of the partner channel, we're working with merchants to further simplify processes. Our ambition is to have the most merchant-friendly ecosystem among European marketplaces. Over 1.5 million products in Poland and nearly 0.5 million in Czechia are covered by the best price guarantee. This is further confirmation for customers that Allegro is the best shopping destination. With us, they can save some money and time. And it is also worth mentioning the prestigious awards we received in the second quarter, Brand of the Year, Best Marketplace and the Best Shopping Experience. Smart! is one of the leading loyalty programs in Europe. We have added new benefits to it and to activate and reward its users. The program now has many new additional features, fun and gamification, unique deals and benefits to be used on Allegro, but also outside the platform. Smart! is extremely popular and attracts hundreds of thousands of new users every year. They also have access to unique events and promotional campaigns. In Poland alone, they are already over 6 million subscribers. We are happy to announce that Allegro Delivery has become the program serving the largest number of parcel lockers in Poland. Thanks to the new agreement with DPD announced in recent days, their number within Allegro Delivery has exceeded 33,000 and the number of pickup points has exceeded 37,000. Thanks to the close cooperation with DHL, DPD, Orlen Paczka and of course, Allegro, buyers and sellers have even more choice in both delivery methods and locations. It is worth remembering that consumers always decide how they want their parcels to be delivered and they use Allegro app to track their shipments. Buyers on Allegro also have access to logistics services provided by other companies. By developing the Allegro Delivery program and our infrastructure, we are increasing the efficiency of our logistics services and our independence from selected service providers. By the end of the year, we want to have over 8,000 of our own parcel lockers, over 1,000 more than we originally planned. It is worth mentioning that thanks to successful negotiations with manufacturers, the installation of a larger number of parcel lockers will take place within the approved CapEx. We have also decided to invest in new depots and completing new sorting facility. This is associated with rapid increase in managed volume, which exceeded 34% at the end of Q2 and increased by nearly 5 percentage points compared to the previous quarter. We're also achieving one of the highest NPS results in the industry, which amounted to 82 points in the second quarter. We are already seeing the positive impact of the cooperation with DHL, which began a couple of months ago, and we expect at least the same effect from the new cooperation with DPD. Let's move on to my favorite slide because it's related to AI technology. Our company is certainly one of the leaders in AI-based technological transformation. We do massive implementation in the company, which will cover almost all parts of the organization. We're talking about areas related to purchasing such as intelligent search engines or recommendations, increasing productivity in software development and equipping our employees with new skills to improve their work efficiency. We believe in this technology. We have already implemented it commercially based on an agentic approach in marketing or customer experience or customer service, and we are convinced that AI is an investment with a high rate of return. We are constantly increasing the use of AI technology in our current and planned projects. We expect that next year, around 40% of the software we produce will contain some components prepared or produced by AI. At Allegro International, we achieved excellent GMV growth in the second quarter, 61%. We also increased the number of Smart! users to over 1 million, and the GMV generated in the application grew by over 100% year-over-year. Allegro International sales are mainly based on Polish sellers, but we're also consistently increasing the number of local partners. We have launched a new program aimed at significantly increasing the number of local sellers and supporting them in their sales. We're also completing the transformation of some of our international assets. In the case of Mall North, the process has been already completed. In our international development, we focus on the 3P model and group synergies. The growth dynamics show that we are doing this better and better.
Jonathan Eastick: Thank you very much, Marcin, and good morning, everybody. It's great to be with you today, and I'm really looking forward to taking you through these really great Q2 results for the Allegro Group. As usual, I'll start with the Polish operations. Key KPIs are in front of you at the moment. Let me move to the next slide and the key KPIs behind the GMV. So as you've heard, the business accelerated in Poland in the second quarter. The main driver for that was increase in spend per active buyer. You can see there on the right-hand side that it's moved up sequentially to 2% growth on quarter-on-quarter, which gets us to PLN 4,178 of annual spend per customer, well over $1,000, and that's an 8% growth rate on a year-on-year basis. In terms of active buyers, over the last 12 months, we've added over 300,000. We're at 15.2 million active buyers for the Polish market. It's very important to remember behind many of these accounts are households. So there are millions of more buyers on Allegro than you see here. When it comes to GMV, up 0.9% sequentially to 9.8% on a year-on-year basis, PLN 16.5 billion of GMV generated in the second quarter. On a last 12-month basis, that moves our GMV up to PLN 63.4 billion, which is 10.1% higher than this time a year ago. It's also important to note that in the second quarter, we had a headwind from the fact that Easter had moved back into April from March a year ago. And for our categories, Easter is actually a headwind unlike for the grocery businesses that you also follow. So with that in mind, the result is even better than it looks at first sight. As usual, supermarket and health and beauty, high-frequency categories that we're focused on continue to grow faster than the average. This quarter, it was 2x faster. Looking for a physical measure of our development, as you know, we track items sold as a marketplace. That's up 11.4% on an annualized basis. It's also worth looking at the ASP on those items sold. Mix adjusted, the ASP is up by 1.7% year-on-year. This is the highest reading since the figures turned positive about a year ago and continues to move on an upward trend. And a quick word on Allegro Pay, 15.3% of GMV was funded by the Allegro Pay payment methods in the second quarter. Loans origination has moved up to PLN 3.3 billion in the quarter. So then let's look at revenue, and we've had an excellent quarter. The growth has accelerated to 18.1% year-on-year, landing on almost PLN 2.8 billion of revenue. And this is obviously coming from the GMV growth, combined with the higher take rates, strong performances from advertising, logistics and consumer lending. Focusing on the take rate, you'll remember from the previous call regarding Q1 that we increased the cofinancing rates in our annual monetization change in March. So there was 1 quarter of improvement included in the Q -- sorry, 1 month of improvement included in the Q1 results. Obviously, we now have 3 months' worth in Q2, and that results in the take rate moving up sequentially to 13.01% for Q2. On an annual basis, it's almost 0.5% higher than a year ago. You see as well on the bridge there, the rates of growth across advertising continuing to be over 30% quarter after quarter. Logistics moving up significantly, more and more of the services or the deliveries that they're doing are actually also the paid deliveries that we do outside of Smart!. So the logistics revenues are going up and also financial income being a driver behind the other income that you see on the slide. So with growth like that in revenue, it's relatively straightforward to grow EBITDA, and our EBITDA moved up by 14.2% for the Polish business in Q2. PLN 1.037 billion of adjusted EBITDA for Poland for the quarter. And you can see the impact of those revenue drivers on the bridge on the left-hand side there, the first 3 items on the bridge. Let's focus in a little bit on cost of delivery. PLN 156 million higher cost of delivery than a year earlier, which translates to a 23.1% increase in delivery cost. As a percentage of GMV, it's actually come down very slightly from Q1 from 5.1% to 5% of GMV. And most importantly, most of the growth in this cost has actually come from volume, from additional parcels from the higher GMV and from additional penetration of Smart!. You see that laid out there, 18.1% of the 23%, plus another 3.5% where Allegro Delivery is delivering parcels that are being paid for by the consumers. That leaves only 1.5 percentage points of impact that's coming from higher unit cost. And when you remember that on the 1st of January, we absorbed a double-digit indexation increase from our largest delivery partner, we're really very happy to see that we managed to offset most of that increase in the Q2 numbers. That unit cost increase is mainly held down in that way because of the growth in our Allegro managed volumes, which were up by 4.6 percentage points Q-on-Q to 34%. And in essence, every single delivery that we move into an Allegro managed delivery method is at a lower cost than the alternatives, and this is why we're now starting to see a significant positive impact on our cost of delivery. Looking at the net cost of delivery, which requires also considering the revenues that are coming from cofinancing, which are part of take rates, the net burden of running the Smart! program expressed as a percentage of GMV has actually come down in Q2 compared to Q2 a year ago. Final comment really on this slide is to draw your attention to the 6.27 percentage adjusted EBITDA to GMV, which is 24 percentage points higher -- sorry, decimal points higher. This is going to be the high point for the quarter -- sorry, for the year. As we expect going forward, as the year progresses that certain cost increases will need to be absorbed; higher salaries, higher costs of various delivery methods, other indexations. And therefore, the margin will come down a little bit later in the year. Moving on to capital investment. And we were signaling to you earlier in the year that the CapEx program this year is significantly more ambitious, and that's what you see in the numbers. 72% growth on a year-on-year basis for Q2 to PLN 193 million, which is mainly coming from an increase in other CapEx, which was up by 4x at PLN 80.3 million for the quarter. This is mostly obviously coming from investments in our logistics expansion. It's predominantly APMs, but also investments in our courier depots and network. When it comes to capitalized development costs, those are up much more moderately, up 22% year-on-year or PLN 20 million. The tech team is slightly larger than a year ago. Obviously, salaries are higher than a year ago. And they're actually spending more time programming new functionalities that Marcin was describing earlier than on maintenance, which is also increasing the share of the cost, which is being capitalized. When we compare to our medium-term guardrails where we've set out a maximum of 25% of Polish adjusted EBITDA to be reinvested into CapEx, our H1 situation is that we're running at a 20% spend. So comfortably within the guardrails. So let's move on from Poland and take a look at the international operations, key KPIs set out on the slide that you see in front of you. I will come back to why this is on a pro forma basis in a couple of minutes. But let's focus in on the Allegro International segment for Q2. Now as Marcin said already, it's been a very good quarter for the international marketplaces, which are our new marketplaces in Czech Republic, Slovakia and Hungary. Great growth across the board. Starting with the traffic, it's up 47% year-on-year. And this despite the fact that we've actually dialed back on our marketing investments and really focused on improving the ROIs on those investments on a going-forward basis. Active buyers up even more, 57.4% at 3.9 million active buyers across the 3 markets, which is a really strong performance. Spend per buyer also moving up 10.2% higher than a year ago at PLN 540. Looking then at the other key metrics, that means that the GMV growth was able to reach 61%, so very comfortably up at the top end of our outlook, and that's PLN 572 million of GMV from these marketplaces. Revenue was up even stronger at PLN 63 million, 111% higher than a year ago. The take rates are up by 2.6 percentage points on last year. More of the Smart! subscriptions are being paid for by the consumers. There's more revenue coming in from logistics. So altogether, revenue is moving up nicely. And that means that we were actually able to cut the size of the loss for the first time on a year-on-year basis. It's down PLN 21 million on a year ago, PLN 66.5 million invested in the marketplaces and the margin to GMV has improved to minus 11.6% in the quarter. Let's move on and take a look at the Mall segment. And as you've heard from Marcin, we've essentially finished the projects around transforming Mall in the northern markets of Czech, Slovakia and Hungary. And the main component of that has obviously been this intentional rundown of their legacy unprofitable e-shop business, which you see reflected here in the GMV for the second quarter, 58.7% lower than it was a year ago at PLN 184 million. That was only generating PLN 24 million of margin, as you see on the right-hand side. And with other cost savings, we were able to actually cut the loss to PLN 55.7 million. And most importantly, because we shut down now the independent operation, the independent front ends, we've been able to take further reductions in staffing. We've also been able to move out of the legacy warehouse, which is too big for purpose and move to outsourced logistics solutions. And those things will help us cut the loss much further in the second half of the year. So summing the 2 segments together, you get the results of international operations, which are shown on the next slide in summary form. And let me now come back to the topic of why those numbers were pro forma. We've made a change in the segment reporting between Q1 and Q2. And what's triggered this is one of the points I mentioned, which is that we've finally shut down all of the Mall North front end, the independent legacy front ends. And now, Mall North only trades as a lean merchant selling over the marketplace. Now applying the accounting regulations, what that means is that the Mall North segment no longer has an independent route to market to generate revenues. And in those circumstances, the segment needs to be rolled up into the bigger segment, the one that does have that capability to generate revenue. So as a result, we now will be reporting the Mall North operation together with the new marketplaces going forward. To see this in numbers, take a look at the next slide. And the key thing here is that the numbers themselves in total are not changing. So the total international operations, which you see there on the right-hand side of the slide is no different between the old way of doing the segmentation, the pro forma, and the new segmentation, which you'll find as reported in the financial statements, exactly the same numbers. The difference is that the Mall North segment moves out of Mall and into the Allegro International segment. You can see that in the gray boxes between the 2 tables and nothing else really changes. What's left in Mall is just the Mall South business, which is in Slovenia and Croatia, where they continue to operate using their independent e-shop. And the last part of this story is that the accounting rules also require when you make a change in segments to retrospectively restate all the history. And we've shown you what that impact is for GMV on the following slide. On the left-hand side, you have the way we've been reporting the marketplaces and their growth historically. And on the right-hand side, this new segmentation. Now what you see there is that the Q2 numbers are essentially exactly the same. And going forward, you'll be looking at the growth of the marketplace as we continue to develop it. When you're looking at year-on-year growth rates, you're going to see the impact of that shrinking legacy Mall growth in the prior year comparatives. And that's going to make the headline GMV growth rates look lower for a few quarters. So that's it for International. Let's move on and take a look at the consolidated group. I normally just talk about leverage when we look at the group numbers, and I'm going to continue that today. Let's start with the leverage as of 30th of June. It's moved down by 12 basis points of a turn to 0.72x adjusted EBITDA. It would have gone down even more if we've not made the decision to use some of the high cash balances at our disposal to increase the investment that we have in our consumer loan book. We put PLN 364 million to work funding Allegro Pay loans during the first half of the year, bringing the total to PLN 867 million. And that, of course, means we retain a bigger share of the financial income that's coming from these loans, sharing less of it with our financing partners and helping our EBITDA. We've also prepared for you a pro forma calculation for the 30th of June to show you what is the impact of the financing transactions that took place in the few weeks after the end of June. In particular, you see here the impact of the return of PLN 1.4 billion to shareholders via a share buyback for 3.7% of stock. Taking that PLN 1.4 billion out of the balance sheet, in effect, has moved the leverage up to 1.16 on a pro forma basis as of the 30th of June. And it will be coming down from there. We expect to be generating significant cash flow in the second half of the year, and we would expect to land around about that 1x leverage that we have in our medium-term guidelines and capital allocation policy as our target level for the group's leverage. So let me move on to the outlook, which, as you've heard from Marcin, is moving up for the full year. But let me just start with a quick look at how we've done at the halfway mark in comparison to the guidance as originally published back in March, which you see on this slide. The key message here is across all KPIs and all segments, we're on track. And the year is going very, very well indeed. Let's look at then current trading, which is laid out on the next slide. How has it been going in the third quarter? Well, we're continuing a gradual acceleration of the Polish business. The GMV is up towards 10% year-on-year. On the international markets, the international marketplaces that were growing 61% in Q2, we're still seeing growth in the 50% to 55% range, reminding you as well, we're now lapping Slovakia as well as Czech Republic results in these numbers. The Mall North legacy front-end GMV that I was describing in the context of the segment changes means that the results for this segment as a whole are going to be slightly negative because we still have these figures in the prior year numbers. And the Mall South segment, which has continued to be reported separately, is shrinking, but that shrinkage has slowed to mid-single digits. So looking at GMV on a group level, we're actually growing somewhat quicker than we were doing in the first half of the year. So that means moving on to look at the outlook update. As we get closer to the end of the year, we're either able to narrow the ranges because there's obviously less variability remaining or in some cases, we've managed to move up the guidance because we're getting increasingly confident we're going to move towards the top end of the range. And that's particularly true for the revenue and the adjusted EBITDA where our expectations are moving up. A couple of numbers just to call out. The Polish operations, we're expecting to come in on or around that 10% growth rate for the full year, but going faster in international than we were originally expecting. Revenues were up across the board. We're looking at 8% to 11% growth for the group and 16% to 18% for Poland. EBITDA costs very much under control, especially in Poland. So the guidance has moved up for Poland to the 10% to 12% growth for the full year. And capital investment, very much on track, no change in the guidance, but we are managing to do 1,000 extra APMs within the cost budget. So with that, I think you can agree that things are going well, and I'm going to hand it back over to Marcin to hit the key talking. Marcin?
Marcin Kusmierz: Thank you, Jon. So let me remind you of our key achievements in the second quarter of 2025. A very solid improvement in almost all financial and operating results. We are very pleased with the growth in GMV, revenue, adjusted EBITDA and the increase in the number of users of our marketplaces and their growing spending. . Advertising and financial services are developing very, very well and have good prospects ahead of them. We are successfully developing our international business, focusing on 3P model, we're seeing solid and promising growth in GMV. We also have completed the transformation of Mall North in Czech Republic, Slovakia and Hungary. And we're continuing the strategic development of our logistics network and the Allegro Delivery program. Managed volume is already at 34% with an increase of nearly 5 percentage points quarter-to-quarter. The new agreement with DPD will certainly have a positive impact on the efficiency of the logistics area. And for sure, it will be accelerating the diversification process. We also have completed a very successful buyback and achieved a historically high free float of 72%. And last but not least, we're working with the Board about new potential growth opportunities to build additional growth drivers into annual strategy update.
Tomasz Pozniak: Thank you, Marcin. Thank you, Jon. We have just concluded the presentation, and we're ready for the Q&A session. Jota, over to you.
Operator: [Operator Instructions] The first question comes from the line of Holbrook Luke with Morgan Stanley.
Luke Holbrook: My first one is just on your delivery partner network that's now handling about 34% of your volume. As you mentioned, it's up 5% Q-on-Q. It was up a similar percentage to the quarter before. So with DPD coming online, almost doubling, I guess, the amount of APMs you have through that network, how can we expect that to trend over the next 2 or 3 quarters, if you could just map that out for us? And then secondly, just on your comments that your delivery partners are now cheaper than your largest non-network delivery partner. I'm just kind of wondering how that looks in terms of when we can expect you to kind of announce the outcome of your renegotiations with InPost for your contract that's due to expire in 2027.
Jonathan Eastick: Okay. Thank you for those questions. Yes. Let me start with the one about DPD. So obviously, we just signed the contract. There has been quite a lot of work going on in the background to get ready for DPD, but there won't really be much impact from DPD in Q3, obviously, because these deliveries will only kick in, in the next few weeks. It will have much more of a significant impact on the fourth quarter. And you rightly highlighted the fact that there's a lot more APMs, 11,000 additional points where we'll be able to funnel traffic, although they're smaller APMs than the others, means that it will also be a driver for increasing the Allegro managed volume metric, especially in the fourth quarter. When it comes to the pricing, obviously, we are talking with InPost and it's too early to make any predictions about if and when we will come to conclusions. We are very constructive about the situation, but we do need to see lower prices. And Marcin, if there's anything you want to add to that?
Marcin Kusmierz: Yes. Thank you, Jon. I think you know that we are purely focused on the development of Allegro Delivery. And you see that we're inviting new partners to the program, all major players on the Polish market. So we just announced cooperation with DPD, the second player on the market. So thanks to that, we have the largest network of lockers on the Polish market and [indiscernible] as well. So this is the crucial point for us, and we want to invest mainly in development of this program.
Operator: The next question comes from the line of Ross Andrew with Barclays.
Andrew Ross: A couple for me, please. The first one is just to double-click a bit on some of the investments, but it sounds like you're discussing with the Board to help growth accelerate. I'm wondering if you can put a bit of a framework around that in terms of when we might see these investments and kind of how you think about margin investment in that context and then kind of when we might see Polish growth accelerate. And I appreciate it's hard to be specific, but if you could just give us a bit of a kind of directional framework, that would be helpful. And then the second question is to kind of follow up on that. In the opening remarks, you spoke about the idea of taking -- or kind of selling some of your services off-platform. On the fintech side, I think you touched on buy now, pay later, but are there any other fintech services that you could envisage being sold kind of off-platform? And you've also touched on logistics. Can you just be more specific by what you meant when you spoke about kind of selling your logistics solution? Does that mean taking other kind of merchant volumes through the Allegro One network? Does it mean something else, it would be helpful to better understand by what you mean on that.
Marcin Kusmierz: Thank you for these questions. Of course, I just joined the company started in May this year. And of course, I was -- and I am still specialized in new business. If you look at my career and my development, I was always looking for some new opportunities, how to speed up growth, how to accelerate development of the company. And I do the same here at Allegro. So we started as a management team discussion with the Board, how we can accelerate our growth, how we see potential directions, also entering some new fields. But this is quite early stage. Of course, we see some new attractive parts of the market we can potentially cover. We see new product categories. We see services, as mentioned before, we see some cooperations or even strategic partnerships, thanks to that we can add something new, something extra to the platform and thanks to that attract new group of customers to us. You know that we have great potential and we have great position on the market, but the market is changing rapidly. So we try to discover all the time some new possibilities, again, to help our customers to find all they need at Allegro, but also, of course, thanks to that to accelerate our growth. And we're also discussing how we can use existing products we develop at Allegro, using example of Allegro Pay or using example of our logistics infrastructure. They represent absolutely the world class. They absolutely are the best-in-class in those segments. So we analyze how we can help our merchants, how we can use our infrastructure to be even more efficient. What is the attractiveness in creation of some new capabilities for our merchants? Because finally, as we saying many times, we want to build a very merchant-friendly ecosystem and to support their growth, of course, mainly on Allegro because we see and we know that this is the perfect place for them to do business together. But of course, we want to be as efficient as we could be. So again, we have many innovations. We have some advantage in comparison to other players, and we want to use these tools to be even stronger.
Andrew Ross: So just to be clear on that, could that involve putting in kind of non-Allegro inventory through the Allegro One network?
Jonathan Eastick: Andrew, it's Jon. If we were to go in that direction, it would almost certainly be on the Allegro Delivery level, right? So it might be non-Allegro parcels, but across all the partners in Allegro Delivery. But it's still at an early stage. As Marcin was saying, these are the areas that we can see a first look to expand our footprint of activity, which is another way to obviously find additional growth drivers. We're discussing these with the Board in this year's planning round. And we would anticipate starting to make tangible moves on some of these once it's all been agreed over the next few months in our planning process.
Operator: The next question comes from the line of Reshetnev Roman with Goldman Sachs.
Roman Reshetnev: Congratulations on the solid set of results. Just to follow up on logistics. InPost previously mentioned that 30% of their Allegro checkouts in Q2 included a prompt to use your delivery network. And given InPost's legal action and some customer pushback reported in the media, could you comment on how do you view the situation from your side? And as we enter the high season when service quality becomes more sensitive, how sustainable is this approach for volume redirection for you going forward? And second one on logistics, just like following the recent partnership agreement with DPD, what would be your long-term vision for logistics in Poland? And given you still have a long way to build out your own network and considering your stronger leverage position, would you look at some M&A opportunities in the logistics space?
Jonathan Eastick: Okay. Thank you for the questions. I think the first part was relating to the arbitration case, if I understood correctly, that InPost has brought under the scope of the long-term contract that we have that runs until 2027. As we actually showed in one of those slides that Marcin put up earlier, have the capability to prompt customers in the checkout process to see and to consider using lockers, which are now available under the Allegro Delivery framework, either because they've just been deployed or because we've added partners, and we do that. We make use of that. I'm not going to comment on what percentage of the time, but we don't use it all the time. We respect the choices of consumers. But what's most important there is that in accordance with the agreement, the customers have just one click on a button that says change, and they can see the full list of all the available delivery methods that they have at their disposal and they're able to pick whatever they want. So we will see what happens in the arbitration, but we don't think that there's any merit to the claim. Now the second part was M&A and logistics. I mean, we don't really comment on M&A. I don't think there's any need to be considering M&A. The Allegro Delivery approach is working extremely well. The partnerships are working extremely well. Who knows in the very long term what may happen in an industry. But in the short term, there's no comment to make on M&A.
Roman Reshetnev: And just a follow-up on the current trends, given that you already highlighted an update on the third quarter GMV growth. And since we're now in the high season, could you also elaborate on the EBITDA growth trajectory? And specifically, how would you describe the activity of Chinese marketplaces in Poland and international over the last months? And do you still see them driving significant pressure on customer acquisition costs?
Jonathan Eastick: Yes. Thank you for that question. Yes, let me come back to the margin. Obviously, the margin was up to 6.27% in Q2, but we try to limit our monetization moves to once a year, and we've been doing that for a couple of years now in the first quarter. So it tends to generate a high watermark in the margin in the second quarter, and it will then trend down somewhat over the rest of the year because the salary raises, for example, are in April. Generally speaking, delivery partners need some kind of indexation increase during the course of the year. The IT providers are obviously also looking for increases. So as these things come into the numbers, plus a natural trend for the take rate to drop lower in the fourth quarter mean that the average margin for the year will be lower than that 6.27%. And obviously, you can back calculate it into the guidance that we've given you today that it's expected to land just under the 6% mark for the full year. Yes. And the second part of the question was around the Chinese. We are seeing an increase in activity. This kind of the rebound or the knock-on effect, if you want to call it that, from the tariffs and the changes that were imposed in the U.S. So there is clearly more activity of the Chinese players across Europe, not only in Poland, in recent months. But we're still not seeing a significant increase in the rate of increase in our own surveys. They're still in the similar sort of range. So there's a lot of top of funnel activity. We don't see that much of it coming through in the surveys that we do that try and look at where people are actually shopping in the month-to-month surveys. It is having an impact on our marketing spending. I didn't touch on it in the EBITDA slide, but you can see that we're up about, I think, 17% on a year-on-year basis. We're fighting on all fronts for the share of voice on all different advertising media. We're not going to cede any ground. We are the leader in this market. But yes, they're an important player.
Marcin Kusmierz: And as Jon said, we see kind of limited direct competition because Chinese players, of course, they are strong, they are innovative, but they cover different parts of the market, mainly being focused on most price-sensitive customers. And this is, by the way, they show some potential for us or some parts of the market to be covered. But we should remember that the strength of Allegro is based on cooperation with 100,000 merchants from Poland and the region, and we have the widest selection of branded products. So again, we see, of course, some rising competition. But right now, we see that we cover a bit different parts of the market.
Operator: The next question comes from the line of Potyra Michal with UBS.
Michal Potyra: I just have follow-up questions. The first one on your net cost of delivery. It seems to have plateaued at 5% of GMV. So my question is, is this the level you are satisfied with? Or we should expect that to return to growth in the coming quarters? And the second question, another follow-up this time on the Chinese competitors. I just wonder, I mean, it seems that margin was lobbying in Brussels. There was also an article in FT on the topic. So maybe you can share some intel what are your expectations on the potential regulatory changes in either Europe or Poland, which could even the playing field between the international marketplaces and the incumbents.
Jonathan Eastick: Okay. Let me take that first question. Yes, the cost of delivery that's at 5% of GMV is effectively the gross cost, we call it cost of delivery these days. And the short answer is we'd like to see that going down over time, right? And the way to do that is to successively blend lower than the average unit cost methods into the mix. And we're on a good path to do that using the Allegro Delivery solution. And hopefully, at some point as well, we may make a modified deal with InPost, but also obviously have a big contribution to that cost. The total burden though, of running the Smart! program and paying for deliveries is, as I mentioned, you need to take into account the cofinancing, which is up in the take rate. The net of the 2, we talked about in a bit more detail in Q1 in the previous update. When you net one against the other, the 5% comes down to about 2.5% of GMV, which is the net cost of running the Smart! program. And the comment I was making earlier was that it's ticked down fractionally on a year ago as a result of the cofinancing changes and this progress that we've made on controlling the gross cost. Hopefully, that's clear. And the second question was about the Chinese.
Marcin Kusmierz: So we don't expect any kind of protection for Allegro or other European players. The only thing we expect is fair competition and to have the same rules for every single player existing or selling some goods on the European markets. So we know -- you know as well that this is today unfair competition. We see that, for example, the U.S. is acting faster and protecting the market against unfair competition. And our expectation is almost the same. So again, we appreciate that some companies that invest in development of European markets, and this is great. But we want to build our competitive advantage, thanks to having the same rules for everyone.
Michal Potyra: But do you have any more kind of specific expectations about potential changes, the timing, et cetera?
Marcin Kusmierz: This is quite complicated or complex topic. And of course, we work with other European players to create some pressure or to explain why some Chinese players, they use the European market on different conditions than we. So of course, we explain to authorities how the market should be defined and how we should act with some initiatives. And we are quite patient. But of course, we see that some Chinese players, they have some advantage, not because they are much clever or they are stronger or much more innovative, but because, for example, using some unfair advantage.
Operator: [Operator Instructions] Ladies and gentlemen, there are no further audio questions at this time. I will now give the floor to Mr. Pozniak for any questions from our webcast participants.
Tomasz Pozniak: Thank you, Jota. We have quite a long list of questions. Luckily, part of them already answered when they covered the questions asked by the analysts so far. Some of them, I believe, were explained during the presentation, the ones that came early. I will address them by topic rather than question by question because they touch upon the similar points. So the first question would be, where are we with the cofinancing and how much headroom we still have to improve it?
Jonathan Eastick: Yes. Thank you for that question. So the cofinancing move that we made in March moved the share that's being carried by the merchants up to approximately 45% of the total cost. That will tick down, as I said, as we absorb indexation increases from some of the players that have different timing to InPost in their contracts. But essentially, we don't have plans to move it up very quickly from here. The long-term expectation that we've mentioned many times is that we see a 50-50 split as being something which merchants can comprehend and still be excited about, and it's very typically the level that you see around the world. So we probably will get there eventually. But we would think that we've gone from 0 cofi to this level in about 4 years. So we won't be moving up so quickly going forward.
Tomasz Pozniak: I believe the next question would be to Marcin because this is asking about the AI-driven marketplaces, AI chats taking away our business. Can you comment on this?
Marcin Kusmierz: Yes, absolutely. We do cooperate with all major players producing AI technology or potentially giving us some access to AI capabilities. And we rather perceive it as a chance for us to have additional sales channels. So this is not kind of competition. This is something supportive for us. And we, again, do cooperate with all major players providing this technology. We know how to use to improve efficiency. We know how to use this technology to achieve better conversion on our marketplace and how to create some new extra value, thanks to purchasing through applications. So we perceive it as something positive to us and hoping that new models will be implemented commercially quite soon because as I said during the presentation, we are pretty matured with this technology, and we know how to build advantage of using AI.
Tomasz Pozniak: The next question will also be to you, I believe, because this covers the recent changes to the regulations concerning access to the Allegro API. And this has triggered some comments on the web. So what is the main reason for doing this? And can this have impact on our KPIs?
Marcin Kusmierz: This is an interesting topic, but this is a technical change because API, this is the protocol used by our partners to manage their products on the marketplace or to automate some processes. And some of our partners, they shared the access to API to other companies without permission for example, and we do invest heavily in development of API because this is something that supports in boosting sales on marketplace and also helping our merchants to be much more efficient. So this is something that we want to secure efficiency of this protocol and to help merchants.
Tomasz Pozniak: The next question, international operations. Are they still a strategic priority for the group? Or could potential exits from loss-making operations be considered?
Marcin Kusmierz: This is a strategic point or strategic direction for us. And of course, we are still mainly focused on the development of the Polish market, and we are here over 25 years. But we are present in the region, not by accident. This is something like a strategic move for us, and we see that we are able to create some special unique value for customers living in Czechia, Hungary or Slovakia. We see increasing number of customers using our marketplaces. We see increasing number of Smart! users. We see also huge demand from merchants using our marketplaces to cover some expectations of people living in the region. So there is no consideration today that we will be only Polish company. We want to stay in the region. We want to develop these markets. And this is quite early stage of development. Let's remember about that. And we're consequently improving our position and our competitive advantage in comparison to any other player on the market. So yes, we want to invest and we want to be there.
Tomasz Pozniak: Thank you. And I believe we have time for just last question. So could we comment on the OCCP case related to our trees being planted for the packages delivered in Allegro boxes -- status and potential impact on the financials?
Jonathan Eastick: Yes, there isn't too much to add. There is a conversation going on with OCCP about their findings. We don't know how that will play out. We planted an awful lot of trees, which we're actually very proud about, and we want to continue that. And as part of our branding identity of Allegro One, but it's also inherently intrinsically a very good thing to do. So if something happens, then we will reflect it in the financial results. We certainly don't expect anything material from it.
Tomasz Pozniak: Thank you, Jon. So that was last question answered by the management. I will address offline a few technical questions that are still there. And thank you very much, everyone, for participating. Jota, over to you for the conclusion.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good day.