Earnings call transcript: Talabat’s Q3 2025 shows strong growth amid market challenges

Talabat Holding PLC reported robust financial results for the third quarter of 2025, with significant year-over-year growth in key metrics. However, the company’s stock saw a slight decline of 2.2% in the most recent trading session, closing at $1.44. Talabat’s expansion efforts and strategic initiatives were highlighted during the earnings call, showcasing its strong market position despite competitive pressures.

Key Takeaways

• Talabat’s Q3 revenue grew by 32% year-over-year.
• The company achieved a 27% increase in GMV at constant currency.
• Adjusted EBITDA reached $154 million, representing 6.4% of GMV.
• Talabat expanded its vendor network by 22%, now totaling over 80,000 active partners.
• The company’s fleet grew to 160,000 riders, a 36% increase from the previous year.

Company Performance

Talabat demonstrated solid performance in Q3 2025, with notable increases in both revenue and GMV. The company’s strategic focus on expanding its vendor network and fleet has contributed to these results. Talabat’s ability to maintain growth amid competitive challenges, particularly from new market entrants like KeeTa, underscores its resilience and strategic acumen. The company continues to capitalize on its multi-vertical approach, with 35% of customers now engaging across food, grocery, and retail sectors.

Financial Highlights

• Revenue: Increased by 32% year-over-year.
• GMV: Grew by 27% at constant currency.
• Adjusted EBITDA: $154 million, 6.4% of GMV.
• Adjusted net income: $112 million, 4.6% of GMV.
• Reported net income: $119 million, 4.9% of GMV.

Outlook & Guidance

Talabat has set ambitious targets for the remainder of the year, forecasting full-year GMV growth of 27-29% at constant currency and revenue growth between 29-32%. The company aims to maintain an adjusted EBITDA margin of 6.5% and a net income target of 5%. These projections reflect Talabat’s confidence in its growth strategy and market potential, particularly in the GCC region, which continues to contribute over 80% of its GMV.

Executive Commentary

Outgoing CEO Tomaso Rodriguez emphasized Talabat’s role in connecting families through shared meals, while incoming CEO Tom Khalils highlighted the potential of AI to enhance value delivery. CFO Khaled Alfakesh noted the company’s healthy growth trajectory over recent years, underscoring its robust financial health and operational efficiency.

Risks and Challenges

• Competitive Pressure: The entry of new competitors like KeeTa poses a challenge to market share.
• Regulatory Changes: Potential regulatory developments in UAE, Saudi Arabia, and Kuwait could impact operations.
• Market Saturation: As the market matures, sustaining high growth rates may become challenging.
• Supply Chain Issues: Although minimal impact was reported, potential disruptions could affect service delivery.

Q&A

During the earnings call, analysts focused on the impact of KeeTa’s market entry, with Talabat executives reassuring minimal disruption. Questions also addressed potential regulatory changes and their implications, as well as the company’s strategy to enhance its subscription model without resorting to price reductions.

Full transcript - Talabat Holding PLC (TALABAT) Q3 2025:

Shadi, Moderator/Host, Talabat: Today I am pleased to be joined remotely by Tomaso Rodriguez, our CEO, and with me in person, Khaled Alfakesh, our CFO, and Tom Khalils, our new incoming CEO. For this call, we have jumped on the AI trend of generating Polaroid shots hugging our younger selves, but we really are not that vain. Instead, given the foodies we are, we have done it with our favorite dishes. Tomaso, forever an Italian at heart, gets to hug his bowl of spaghetti Bolognese with an extra sprinkle of Parmigiano. Khaled’s shot here betrays a caffeine-fueled love story. For myself, Gemini might have slightly exaggerated my love for Vietnamese pho, but I will take it. We get to introduce Tom by sharing that he is a burger guy. Straightforward, satisfying, and ready to sink his teeth into what is next.

Okay, so before I hand over, a few of the usual housekeeping points and agenda. I’d like to draw your attention to our disclaimer, which is at the end of this slide deck. In particular, I would like to highlight the section on forward-looking statements, which covers such items as dividends and financial guidance. For today’s agenda, Tomaso, our CEO, will take us through key highlights for another set of strong results this quarter, in line with our guidance and still carrying much of the momentum from the first half of the year. Tomaso will also run through how far we have progressed our growth strategy in the last 12 months, building up the Talabat experience and ecosystem across both our markets and product verticals. Following that, Khaled, our CFO, will go through our financial results and guidance, particularly the main pro forma line items that we have disclosed today.

Lastly, Tomaso will speak on the CEO transition and introduce Tom Khalils, who will officially take up the role of CEO on the 21st of November, later this month. With that, let me hand over to Tomaso.

Tomaso Rodriguez, Outgoing CEO, Talabat: Thank you, Shadi. Shadi, did you call me Tomato at some point? Sorry.

Shadi, Moderator/Host, Talabat: Thank you, Shadi, and thank you everyone for joining this call. We’re really pleased to report our third quarter for this year, which shows really a continued momentum from the previous two quarters. For Talabat, as usual, excluding Instant Shop, GMV grew 27% in the third quarter at constant currency, and revenue grew at a faster pace, 32% year over year, also at constant currency. Our adjusted EBITDA reached $154 million, which is 6.4% of GMV, in line with our full year guidance, and Khaled will go through the drivers of this in the next session. Adjusted net income was $112 million, or 4.6% of GMV. Our reported net income was slightly higher, $119 million, or 4.9% of GMV. This is the metric we are guiding for this year, and Khaled will go over the bridge between the two measures in the coming slides.

As discussed previously, we remain on track to pay a minimum of $400 million in dividends for the full year 2025. We previously communicated that we intend to recommend to our board a payout of 90% of our reported net income, which equates to approximately $425 million based on our full year guidance. If this is endorsed by the board, this would then be subject to shareholder approval at the AGM in March next year. Next slide, please. After almost one year from our IPO, we thought this is a good moment to look back at the priorities we discussed during our roadshow, and now we’re tracking against them. I think we’re seeing very, very good momentum when it comes to growth and customer base. Our average MAUs were 23% higher this quarter versus a year ago, and growing at a faster pace of 19% of last year.

This comes despite the impact of the five-day administrative closure in Qatar in September, considering Qatar is also our fourth largest market by user base. On the right-hand side, you see that similarly, our order frequency has contributed to increase both for the overall platform and for our highest value customers. We always like to look at our highest value customers, the ones that order the most, and which we intuitively will think they are the ones that grow the least, but actually our top 5% cohort has been growing at 5% year over year and the average platform 4% year over year. We see very strong momentum both in increase of MAUs and in the increase of frequency of the MAUs. I think there are really no tricks or shortcuts for this.

We have to consistently offer the best consumer value proposition in our core online delivery business, which attracts new customers, retains them, and drives their order frequency. This means that we always have to be expanding our selection, improving our experience, and offering more value, as we discussed many times. This is exactly what we have done, as you can see on the next slide, please. When it comes to selection, we have been expanding our selection of vendors by almost 22% over the last 12 months, and we have now more than 80,000 active partners on the platform. We also continue to improve our experience with the largest fleet in the region. Our fleet now consists of more than 160,000 riders. That is up more than a third from a year ago.

Lastly, when you have the best selection and you have the best experience, you need to make sure that you are very good at affordability and value for your customers as well. That is why we have been focusing very much, as discussed many times, on partner-funded savings. We have been pushing the boundary there as well. As a percentage of GMV, we have around 6.3% of vendor-funded savings, which equates to around $500,000,000 over the last 12 months. This metric was 6.1% for the same period of last year and 5.1% for the full year of 2023. As you see, we keep expanding on value as well. The second part, sorry, next slide, please. Thank you. The second part of our strategy, once you build a super strong and core business, is also to build a great ecosystem around it, right?

That drives stickiness and retention. On this point, we’re mainly focused on multi-verticality: Talabat Pro, our loyalty subscription program, and AppTech. When you look at multi-verticality, our adoption rate increased by around 3 percentage points, and now we have more than one-third of active customers that order across food and grocery and retail verticals. When you think that we continue to acquire all these customers as monovertical food, mostly, and then we work on converting them organically enough to become multi-vertical, you can see that this is a great result, especially because our MAUs have been growing faster this year than last year. Even more importantly, these 35% customers represent more than 70% of our GMV. We believe this is a great moat to more engagement, loyalty, and a moat to competition. As we discussed many times, multi-vertical customers have many-fold higher frequency than monovertical customers.

On Talabat Pro, our subscription program, we now have more than double the adoption rate versus last year, and almost half of our GMV now comes from orders placed by Talabat Pro subscribers. In Q3, we launched the program in Iraq, following the very successful launch in Egypt in Q1, and Talabat Pro now is live in all our eight markets. We continue to enhance the program’s offering beyond free delivery, and we are including exclusive discounts on hundreds of key value items on our T-Mart dark stores, booster discounts on bestsellers in the food vertical, exclusive dine-out discounts across all our restaurant partners, and other exclusive discounts through partnerships, such as online streaming services or ride-hailing, where we have partnered with the likes of Spotify and Bolt. Lastly, on AppTech, margins have increased from 3.5% up from 3.3% of last year.

We continue to aspire to the leading e-commerce margins of 7.5%-8% as a long-term ambition. We see a lot of potential in two areas, the first one being CPGs as key focus areas in the journey, especially as we grow our grocery and retail vertical, and our non-margin revenue has been improving. Secondly, deal orchestration and further personalization is also a development area as more targeted advertising improves our partners’ and CPGs’ ROAS and can help us better price our ad solutions. Move me to the next slide, please. As we said, strong food business based on selection, experience, affordability, strong ecosystem, multi-verticality, Talabat Pro, and AppTech. Finally, we go back to our initial thesis on how penetrated is the business.

We ask our third-party market consultants to kind of refresh a bit the market sizing exercise that we presented during our Capital Markets Day in October of last year. I’m very pleased to say that the market opportunity today is even larger than before as our markets continue to grow. The graph on the left shows the frequency of orders per month per capita based on the addressable population of our markets, which is defined as the people aged between 15 to 64 years old living in urban areas. For Talabat, at the time of the IPO, we were at 0.4%, and now this has increased to 0.7%. Also, there was an increase of 4% in the addressable population in our markets.

This remains very far away from leading delivery markets like China, where monthly order frequency per capita increased to 7X from 2.9 for the top layer. This is not at all on account of free Talabat orders. It is also very far from the daily or even biweekly ordering if we ignore the theoretical maximum of 90 because people eat three times a day, 30 days a month. With two orders per capita per week, this is still almost a 20X opportunity from where we are today just on food. When you look at grocery, the opportunity is even much higher. If you look on the right side, we show that the total addressable market for both food and grocery and retail combined has grown to almost $140 billion, up from the $125 billion figure we previously showed.

For food, this is all eat-at-home food, whether ordered online or not. For grocery and retail, this is all grocery, both purchased offline and ordered online, plus high potential retail categories such as flowers, pharmacy, health and beauty, and small electronics. We increasingly look at this market opportunity as one because really the market for food delivery can grow to complement the grocery market as well. As you see, the potential TAM has been expanding at a very rapid pace. When we look at our GMV, there is definitely a massive headroom to grow into. I will now hand it over to Khaled to go through our Talabat financials in more detail and come back later. Sure. Thanks, Tomaso. As before, our reported financials cover the Talabat asset perimeter that IPO’d and include InstaShop performance starting from February 25.

What we are presenting today are pro forma financials for Talabat, but excluding Instant Shop. They are pro forma financials given the listed company was only incorporated in September 2024, and so reported financials do not include historicals. Also, we are excluding Instant Shop to allow for a like-for-like comparison of our performance and easier comparison with the previous Talabat-only guidance. However, standalone Instant Shop performance is included in the appendix. Now let’s walk you through our financial results. Q3 has been another strong quarter for us. The momentum we saw in the first half of the year has continued. At the top line, our GMV grew by 27% on a year-over-year basis at constant currency. This was driven by a stronger order volume across all markets, which in turn was fueled by strong growth in our monthly active users as well as the increase in the order frequency.

GCC markets remained strong, growing at double-digit rate of 20% on year-over-year basis and still contributing to more than 80% of our overall GMV. UAE, our largest market, maintained its robust growth trajectory, growing in line with the group’s overall pace. Kuwait, our most established market, continues to deliver strong double-digit growth for both the quarter and for the first nine months of the year. Likewise, our food vertical is growing at 20% growth on year-over-year basis, strongly contributing to the overall growth of the business, and our grocery and retail vertical grew even faster at 43% on year-over-year basis. Q3 27% growth was in line with expectation and our revised guidance that we have shared in August 25. The guidance took into account market dynamics, competition, and summer seasonality.

The only unanticipated event was the administrative closure in Qatar that lasted for only five days in the middle of September. This one-off event accounted for an approximately 1% loss of the overall GMV of the group during the quarter. The good news is that in a very short time frame since reopening, the team were able to recover more than 90% of the order volume. Revenue growth continued to outpace GMV with 30% growth on a year-over-year basis at constant currency. This is largely due to an increase of the share of the T-Mart GMV. As a reminder, T-Mart, our own grocery dark stores, and their GMV flows directly to revenue at effectively 100% take rate. T-Mart’s share of revenue increased to 31% this quarter, up from 28% for the same period last year.

We have also seen an increase in subscription revenue, reflecting the increase in Talabat Pro adoption rate. Now turning into profitability and cash flow. Our adjusted EBITDA came in at $154 million, 6.4% of GMV. This is slightly lower than the prior year period by 0.2 percentage points and largely due to lower gross profit margins that were partially offset by improved OPEX margins. The slight softness in gross profit margin is primarily due to the fact that commission rates were lower by 0.4 percentage points as our product mix continued to shift towards the lower margin grocery and retail vertical. Yet it’s worth highlighting that our AppTech margins improved by 0.2 percentage points to reach 3.5% of GMV this quarter, and this remains among the highest in the industry. Looking at below gross profit, we continue demonstrating operating leverage, where our OPEX margins improved by 0.2 percentage points.

Despite an increase in our marketing costs both on the customer and the vendor side, our tech and SG&A margins reduced as a percentage of GMV. Moving further down the P&L, our adjusted net income grew by 15% on year-over-year basis for this quarter, with a GMV margin of 4.6% compared to 5.1% in last year. This change reflects slightly the lower adjusted EBITDA margin that we have just discussed, as well as the year’s impact of a higher corporate income tax rate in the GCC, which we have flagged in previous earning calls. On a reported basis, net income was higher at 4.9% of GMV versus 4.7% of GMV for the last year. Reported net income is the measure that we are guiding toward this year.

As a quick reminder for everyone, our adjusted EBITDA measure is designed to allow a comparison of our true underlying performance by removing non-operational and often non-recurring items. For this quarter, the main adjustments were excluding net income interest earned on our cash balances and also excluding foreign currency losses in last year comparison related to the intercompany shareholder loan in Egypt. Finally, talking about cash flow, our adjusted free cash flow margin was lower at 4.1% of GMV. Yet on a nine-month period, our free cash flow remains strong at 6.1% of GMV. This is still based on the same adjusted free cash flow definition we have used since the IPO.

The lower margin reflects new tax payment as well as the reversal of the one-off net income, sorry, the one-off networking capital cash flow that booked in the second quarter, which was related to the timing of payments and was previously flagged in previous earnings calls. Finally, we reiterate our guidance for the full year. You will be remembered that this was revised upward in August as part of our Q2 earnings release to reflect our strong first-half performance. While our guiding toward the lower end of the original margin ranges, the faster top-line growth means we have higher minimum dollar value across all metrics and tighter ranges. For the remainder of this year, we continue to expect GMV to grow in the range of 27%-29% at constant currency. This takes into consideration the entry of a new competition in our GCC markets by end of year.

Our guidance also reflects slightly stronger year-over-year growth in the first half of the year due to the softer comparison in the last year, where we still had some boycott headwinds when it comes to the global American brands. We also expect faster revenue growth of 29%-32% at constant currency, reflecting growth of T-Mart GMV within the product mix. Adjusted EBITDA margin of 6.5%, net income of 5%, and adjusted free cash flow at 6%, reflecting further investments in growth, multi-verticality, enhancing our Talabat Pro proposition and further expansion of our T-Mart dark stores network. Lastly, for dividends, we are on track to pay out a minimum of $400 million as per shareholder-approved dividend policy. In September, the board approved an interim dividend payment of $202 million, equivalent to 90% of net income in the first half of the year.

Management intends to recommend the same payout ratio of 90% for net income for the full year, subject to board and shareholders’ approval. If this is approved, this would equate to approximately $425 million based on the minimum Talabat-only guidance figures on this slide. With that, let me hand it over back to Tomaso to say a few words on the CEO transition underway. Tomaso, you’re on mute. Sorry. Thank you. Thank you very much, Khaled. Before we introduce Tom and before we wrap up our presentation, I’d really like to just share a personal note. I really want to thank all of you for the opportunity that has been given me to serve this company for the last six years. It’s truly been a real honor. My time here at Talabat has been filled with countless days of really profound joy, learning, and growth.

We also had our share of sleepless nights, challenges, and pushing boundaries. All in all, through it all, I had the privilege to really work alongside incredibly talented and dedicated people. I consider many of them really true friends today. Beyond the milestones and the fantastic business growth and the metrics that show it all, I think it is the human impact that really makes me proud. We have seen our efforts impacting the lives of 160,000 riders, providing them not just with jobs, opportunities, livelihood, and a pathway to a better future for themselves and their families. I think this is really what we do at Talabat. We do not just deliver food and groceries. We unite families, bringing them together over meals. We make people’s dreams come true by empowering entrepreneurs and providing opportunities. We build communities by connecting people across the region.

That really, in essence, is what makes this place so incredibly special and unique. I will still remain on the board of Talabat as a non-executive director, and I will continue to help and support the company in any possible way I can. At the same time, I’m equally excited to announce that Tom will be taking over as the new CEO. Tom is not new to the Talabat family. We have a saying, "Once a Talabati, always a Talabati." He served as our COO. During that time, we spent countless days together. We navigated through crises like COVID, celebrated victories, and shared good times. He’s an exceptional leader. I have full faith and trust in his vision and capabilities to lead Talabat into its next chapter of success.

With that, let me hand it over to Tom to speak of his journey so far and maybe share some early thoughts on the future direction of Talabat. Thank you, Tomaso. Hey, guys. So I’m Tom. Really excited to be here today and to be rejoining Talabat in 11 days. I want to use this opportunity to briefly talk about who I am and why I’m here. I’m from Belgium. I’m an engineer by education, worked at McKinsey, and then I left to co-found a company that delivers food from restaurants. Right? Back in the days, that was actually new because only marketplace solutions existed where the restaurant delivers. That company was acquired by Delivery Hero. That brought me about a decade ago now, that brought me to the region to then lead Talabat. Back then, Talabat was a very different company.

It was also just a marketplace model. It was not the number one in all the markets. It had strong competition from Deliveroo, Careem, several others in all the markets. I was there for five years, had an amazing time with the team. Many of those are still here today. We delivered massive growth. We grew the company 20X, made it an uncontested leader in its eight markets. We also built the foundations of what Talabat stands for today, right? Starting with logistics. Back then, there was no logistics. I think the team and I, we built the technology, we built pretty much everything. Until then, there were like 60,000 riders at the end, something like that. We also built the quick commerce business, right? That 15-minute delivery concept, we pioneered it. That was before COVID already.

During COVID, we built out more than 100 T-Marts regionally while in lockdowns. We built many more things, right? We built the AppTech suite, the kitchens. We launched Talabat Pro. That has been a crazy and a fun time. Afterwards, I joined my friend Mo Balut at Kitopi. There was a leading cloud kitchen operator, and he just raised $700 million to pivot towards becoming a tech-powered F&B player, which was a massive undertaking. We bought and built 80 brands, opened more than 200 restaurants across the region. We built us a lot of technology, right, to manage all these brands, on the marketing side of it, on the operation side of it. By now, I know a thing or two about the restaurant business and how to improve that with technology.

After Talabat, I’ve also been helping founders, dominantly AI founders, in building and scaling their companies. I worked with companies that have AI in the core of the product, for example, in education tech, but also AI ops companies that actually use AI to automate, streamline back-office operations. Great learning experience. I see huge opportunity for Talabat to benefit from that. That kind of brings me to why I’m here, right? I’m very excited about the future for Talabat. It’s a household brand serving millions of customers. Talabat has done fantastic under Tomaso’s leadership. My first priority will be to continue that strategy, right? The focus on choice, affordability, experience, and also driving that ecosystem value. We should continue that push. Secondly, I see a lot of opportunity to accelerate innovation and further expand the value for our customers and our partners.

Today, with the world of AI, we can think bigger and we can deliver value even faster. For example, I see huge potential on smart targeting and personalization, not just for the customer experience, but to improve the returns on that $500,000,000 of partners in the deals that we have, right? There is a lot we can do to improve that effectiveness. Finally, my third priority is I’m a strong advocate for culture and people, and I really want to unlock the full potential of all our employees, the Talabatis, with an even more empowered culture and agile organization where everybody is truly going to be part of shaping this next chapter for Talabat. I am really excited to be rejoining.

I’m sure we get more chance in the future to talk about all these exciting things we’re going to do, but I’ll keep it at that for now and hand it over to Shadi for the Q&A. Great. Thank you, Itoun. If you do wish to ask a question, please use the Q&A feature in Zoom to submit it in writing, mentioning your name and firm. If you prefer to ask the question orally, please use the raise your hand feature, and we will give you the floor to speak. With that, let me hand the floor over to Joseph Barnett Lam from UBS. Go ahead, Joe. Excellent. Thank you. Are you able to hear me, guys? We can, yes. Thank you. Tremendous. I see three questions from me, if I may.

Firstly, can you provide color on the latest trading environment in the regions where KeeTa has entered? What impacts are you seeing, and how does that impact your thinking for FY26 GMV growth? Second question, the one-week closure that you faced in Qatar in September, you said you’d regained greater than 90% of the order volume. Did that simply happen organically, or did you do anything specific? What was the adjusted EBITDA impact of that closure and the related response? Finally, albeit related to question two, I guess, and where there’s been a number of sort of moving parts in terms of regulation in some of your key regions, namely Dubai and Qatar, have there been any other, meaning any impactful developments lately, and has your thinking around those shifts changed at all? Thank you. Maybe I can start from KeeTa and Khaled.

Maybe you can take the one on Qatar numbers. Feel free to add if you want. As you know, KeeTa has been entering a few of our markets, and Qatar being the one where they have been the longest now. I will say that what they have been doing is exactly what we expected in terms of heavy promotions and discounts and really, really focusing on affordability. I think to the point that it is almost about giving food for free. The good news is that although they have been growing, everybody will be growing by providing food for free. We see very, very, very limited impact on what we define as high-value and medium-value customers, i.e., the ones that are the most profitable and the ones that generate more orders on the platform, right?

I would make sure that what’s really important for us is when we look at our growth, right, and making sure that our growth is not impacted or marginally impacted, right? I think focusing on metrics or market share or whatever, I think at this point, at this specific time, is not that relevant, right? When we look at our growth, I see that we have a sustained momentum across the region. I think this really proves that our ecosystem strategy works. As I was saying before, 70% of our GMV is customers with multi-vertical GMV, so using both food and groceries. As we said before many times, the frequency of these customers is much, much higher than the mono-vertical customers, right? Talabat Pro already has 50% of our GMV in terms of customer penetration.

Our selection, of course, is much bigger than KeeTa’s selection. Our experience is much better because of a larger fleet, more efficiency, better delivery times, etc. I think that everything we’ve been preparing for for so long, I think, is really playing out well, and it’s working. Yeah. Maybe on Qatar. Basically, I think, first of all, we’ve seen tremendous love from customers, from all stakeholders during this period. The team did amazing and worked with the Qatar authorities. We were very collaborative. Actually, the shutdown was only for three working days. I think in terms of financial impact, as I mentioned earlier, on the GMV front, it’s around 1% of the overall GMV. I think on profitability, there’s no really significant impact. Hence, we are reiterating the full-year guidance despite the shutdown that took place as well.

I think in general, when it comes to regulations, definitely, we keep an eye on the regulations on what’s happening. I think now probably Saudi would be a good proxy on the implementation of GAC that we would expect to take place probably very soon. Nothing really new. In general, we see these guidelines as positive for us because it encourages fair competition, but really nothing new on that front. I don’t know if you want to add anything, Shadi, on the governments also. Yeah, no, I think, I mean, we’ve mentioned this before, and I think on previous calls with investors as well, there is generally a greater focus and scrutiny from regulators on the sector as a whole. There’s something for everybody in these guidelines, and they do prohibit predatory pricing by and large.

I mean, even without these specific sector guidelines, predatory pricing is generally prohibited anyway, but they apply specifics to our sector. We think that there should be some greater scrutiny on this predatory pricing in time. They preclude launch offers and time-limited campaigns, etc. We probably need to give them a bit more time to see how they get implemented in our markets. We think this could be something positive for the UAE markets, Kuwait markets, and we’ll see if other jurisdictions also look to implement something similar. I don’t know, Tomaso, if you have anything to add before we go to the next question. Next question. Thanks very much. Thanks, Joe. Okay. Next question from Andrew Ross at Barclays. Over to you, Andrew. Hey, guys. Can you hear me okay? All clear. Great. I’ve got two, if that’s okay.

The first one’s for Tomaso, and I hate to ask, but I wanted to maybe get a bit more color from you around the timing of your departure as CEO. I think it was a bit of a surprise to investors a year after the IPO and in the context of new competition. If there’s anything else you could share around the timing of why you made that decision from your perspective, and I guess anything from the board’s perspective, that would be helpful. That’s the first question. The second one is to follow up on Joe’s one about regulation. Clearly, there are things live in Saudi. There’s a new set of legislation which has come into place in Dubai. What’s your expectation in terms of where we’re going in the rest of the UAE and elsewhere in the GCC?

Is there kind of anything in the pipeline that you’re aware of or, as it stands today, could kind of May 1 continue to offer big subsidies in some of those other regions? Thank you. Sure. On the first question, Andrew, this was, as we said before, kind of a planned transition. We’ve been in discussion about this since a while, I would say. It’s been an incredible run. I’m very grateful for the last six years at Talabat. I feel everything we could do was done leading to the IPO, which was really a defining moment for the company and for myself. Again, I’m going to stay on the board, so we want to make sure that we ensure as much continuity as possible. Tom has been ramping up for a while. The team is still there.

The strategy will continue as it is, and there’s absolutely no—the ball will not drop at all, and nothing is going to fall in between the cracks. This was planned over time, and the company priority is the one thing that is the most important to all of us. Maybe on the regulations, I think in general, we would expect probably UAE would potentially adopt similar guidelines at the federal level. In fact, we had some conversation with the authorities in Abu Dhabi as well. The one that also Shadi was referring to is basically Kuwait. Also, Kuwait, the Ministry of Commerce, also had a meeting with the industry players. We’ve already participated in that meeting, and they share similar interests in potentially applying similar guidelines as well. This is basically the one that we are so far aware of.

But I think in general, in GCC, between Saudi, UAE, and most likely Kuwait, if there will be a regulation, we would expect most likely the rest of the GCC to follow. Okay. Thanks. All right. Thank you, Andrew. Next one, I guess, is going to be Luke. Joe, Andrew, and Luke. I didn’t know. Okay. Luke, over to you. I knew it. Yeah, good afternoon. Hopefully, you can hear me. I’ve got three questions as well. My first question is just, have you seen any growth actually accelerate after KeeTa’s entered the market like we saw in Saudi with Hungerstation in the first quarter after they launched? I’m particularly interested in Kuwait. It looks like some of the data looks like you’re doing relatively well in that market.

My second question is just on driver supply here and just whether you’re seeing any issues around whether you’re needing to incentivize your drivers more or any other measures that you’ve had to take to retain driver supply. I know the stat that you just gave in the presentation was up a third, but any more context around that? The final question was just around the partner-funded savings and whether there’s been any shift, any move over the last couple of months as well. Thank you. I can probably cover the first two, Tomaso, if you don’t mind, and maybe you take the partner-funded savings. I think in general, when it comes to growth, I think probably the timing of competition and certain economic slowdowns we are seeing.

There is a bit of—we have seen a bit of deceleration in the growth in general, and I think that is also expected to what Tomaso mentioned earlier. I think what matters the most now is to continue growing at double digits. I think this is very important for us. When it comes to riders, I think all the measures that we have taken probably six months, nine months ago, started to yield now. If you see, our fleet has already grown more than 30%, I think 36% if I recall correctly. We are already at 160,000 riders. We do not see any major issue when it comes to supply.

There might be slightly an increase, of course, on the cost per delivery because you need to do probably some incentivization, but largely because of the size of the fleet and the measures that we previously have taken into account, we do not see a massive increase in logistics costs. I think on the growth side, maybe I can add one point. I think Hong Kong and Saudi were kind of quite different markets, right, when KeeTa entered. And I believe Hong Kong, it was kind of a high MOV type of market, and Saudi was kind of more of a high delivery fee market. When KeeTa entered with a massive affordable value proposition, you have seen unlocking kind of a chunk of demand that probably was not ordering before. I think in our market, that is quite different. Our delivery fees, as a percentage of the basket, are not high.

Also, when you look at affordability, we offer a lot of affordability, as we said before, 6.4% of our GMV, $500,000,000 of vendor-funded deals. I think it is a much more mature market, right? I think that is why you do not see the same probably happening. Our growth has been very, very healthy over the last years already. Understood. Thank you very much. Was there another question? No, those were the three. Those were the three. Each just takes off. Right. Thank you, Luke. Next one from Maxim at Citi. Go ahead, Maxim. Yes. Hello. Thank you for the presentation. A few questions on my side.

The first one, maybe a little bit on if you can share some of the trends regarding InstaShop because I think the details were missing from the press release and presentation just in terms of the contribution, profitability, and the kind of pro forma growth there. Another just to follow up on the delivery question, right, more on the delivery fees and delivery revenues, right? As I can see from the financials, delivery fees decline, I think, about 5% quarter on quarter. I think there is some deceleration year on year in terms of the delivery fees. Maybe if you can talk a little bit about the drivers of that deceleration, right, and quarter on quarter decline. Finally, on Saudi, right, as I think has been mentioned before, where they saw the entrance of May 1 is a bit earlier.

We see that the leading platform there, Hungerstation, had to, as you can see on the app, basically offer a very affordable subscription, right? I think it is SAR 6 for six months, right? Just about $2 for six months with the vouchers, right, and the delivery promise. I wonder if you would consider, if you were considering implementing similar measures, right, such as heavily subsidized subscription in response to higher competition or what potentially could make you consider that or you will not consider that at all. Any thoughts on that would be really appreciated. Maybe I can quickly cover those. I think let me start first with the delivery fee, and then I will take you through the subscription, and then I will answer on InstaShop.

I think on the delivery fee, it’s very important, Maxim, to look at the delivery fee line items within the financials, the service fee, as well as the subscription fee. Because the more the TPRO penetration, you would see the delivery fee is going down because of the free delivery fee that the subscribers enjoy, but the subscription revenue is increasing. In fact, if you look at the effective fee, the way we look at it, we look at the delivery fee plus service fee, I think it remains within the range of 9 percentage points of GMV. I think on the subscription, and Tomaso, please feel free to add, but I think we strongly believe that our subscription is fairly priced. We don’t believe in providing really free subscription because it’s beyond just free delivery.

Yes, it’s free delivery for food, but you enjoy free delivery on grocery. Almost one-third of our GMV is grocery, and it has really a great additional value for consumers such as all the booster deals, the discounts, the exclusive discounts on really 300-500 key value items on the dark store business. I think we are not into that camp. Lastly, on InstaShop, from next year, of course, we will include InstaShop in the reporting for easier comparison. In general, InstaShop is still growing at 8% on year-over-year basis. GMV is around $157 million for the third quarter and still contributing positively to the bottom line, whether on EBITDA or net income. Yeah. I can maybe add on the subscription. I really believe that customers, when they buy a subscription, they have to have a bit of a skin in the game.

Our answer when it comes to making customers more loyal, I would say, is never to lower the price of the subscription, but to maybe increase the benefits and the value we provide with that subscription. If something, we may increase the price in the future. Who knows if we can provide even more benefits and even more value in the subscription. I think the luxury we have as opposed to other players is that we can play among different verticals. We can provide benefits not just on food, but also on grocery and retail and fintech and dine-out. We have amazing partnerships like the one with Bolt or with Spotify. The direction is to increase the value and announce the benefits and not reduce the cost, the price, sorry. Thank you so much. Thanks, Maxim.

Actually, I’ll just add one quick point on the delivery net take rate. Net take rate has gone a little bit more negative. That means kind of subsidizing it a bit more from commission rate. As Khaled mentioned, the subscription fees increased. The net effect, you take delivery fees, service fees, plus delivery costs and subscription fees, is only a 0.2 percentage point reduction in total. Okay. Just a question, I guess, from Mohammed Kamal on the investor side, on the buy side from Intrust. Go ahead, Mohammed. Mo, can you hear us? Okay. Might come back to you, Mo. Ankur Agarwal from HSBC. Go ahead. Yeah. Thank you for the opportunity. My question is around the limits to which discounting can help in the UAE, for example, right?

We’ve already seen the Saudi market third quarter, basically the market gross booking value declined in quick commerce. Do you think the UAE, Kuwait, Qatar would follow the same trajectory as Saudi, that there would be a few quarters of disruption before it settles down? I mean, it’s just been one month of KeeTa, right? In your numbers, the impact of KeeTa is only for one month in this quarter, right? Yeah. I’m not sure I understood the question fully. The question is that basically, if we look at the Saudi market, the incremental benefit that KeeTa has seen between Q2 and Q3 of discounting, their market share hasn’t really gone up that much despite significant discounting. Should we expect that trajectory even in the UAE and other markets? Is the question.

You mean KeeTa’s market share hasn’t been going up in Saudi? I think between Q2 and Q3, the gain has been very limited despite continued discounting, is the point I’m saying. Yeah, I think, yeah, but that’s exactly what happens when you are giving very, very, very aggressive discounting, right? You have the low base of customers, the low-value customers that are the ones that kind of place these orders. And honestly, also, there’s a big chunk of customers that are not potential customers for the future that also place orders. Customers that, once the discounts are over, they will not be eligible. They will not be addressable market for food delivery, right? The moment you start slowing down these discounts, all that big chunk of customers stops ordering from you, right? I think the hope is that some of them will stay.

Actually, if you have another platform that offers already a very wide selection, better experience, and great affordability nevertheless, plus a strong ecosystem like Talabat does, I think the alternative, the moment the discounts go away, Talabat is a much stronger platform, much stronger value proposition than what KeeTa can offer today, right? That is how we see it. My second question is on the expected regulation in all the GCC markets, right, or the regulation which was being discussed earlier. How do you see this regulation impacting you versus KeeTa, right? What is the underlying theme of these regulations, right? In Saudi, we know that they basically affect players which are selling below variable cost. In the UAE and other markets, would the regulations favor the currently well-entrenched players? Yeah, maybe I can take this. Okay.

You want to take it, Tomaso, or should I take it? Go ahead. Yeah. No, I think the answer is just simple. I think the impact on us would be positive, right? Because I think the main point of this regulation is around predatory pricing. If you look at the way that the competition is operating now, it is basically with a really negative, massive negative gross profit margin, which means this is the clear definition, in my view at least, of predatory pricing. Probably just a period of time, but we believe that the regulators would interfere. This does not apply to us because we are already running the business at healthy unit economics. The reason is that we have an efficient fleet. We have the ATIC penetration of 3.5%. We have all the partner-funded deals, etc.

Simple answer, we would expect the regulation of this, sorry, the impact of this regulation is rather positive for us than negative. All right. Many thanks. Thank you, Ankur. Maybe a final question from the buy side. Yakub El-Ghanem, I think from Markaz, if I recall. Go ahead. Hi. Can you hear me? Yeah, faintly, if you can raise your voice a little bit. Thank you very much. Just some questions. First of all, the year-to-date EBITDA margin is at 6.6%. And given the guidance, it implies just a few basis points of contraction from Q3 to Q4. It is much less than the sequential and year-on-year compression we saw this quarter. Should we expect the GMV mix shift to normalize, or should we expect an offsetting impact from efficiencies from the OPEX level? Yeah. I will then go with the second question later. Yeah.

Thanks, Yakub, for the question. Yeah. I think in general, Q4, there’s a bit of seasonality on the profitability side, primarily related to the dark store business, the T-Mart business, where we enjoy all the progressive rebates by end of year. That’s why you’d see slightly higher EBITDA margin in Q4. That’s primarily the only reason. Plus, of course, usually with year-end reconciliations, we usually get some reversals of certain accruals. That has been also taken into account. I would say the primary reason of Q4 is just the rebates on the dark store business. Perfect. Makes sense. Regarding commission rates in the GCC, how is that trending so far? Also, if you can provide an update regarding the shared group costs and the transfer pricing, if there are any updates. Yeah, sure.

I think on commission rates, if you look at the financials, the commission rates year-over-year deceleration is just primarily driven by the product mix, 0.4 percentage points. It’s just because of the product mix. I think, generally speaking, commissions trending is rather than stable or slightly positive. We don’t see a decline in commission rates. On group costs, I was expecting that the moment I said Yakub, I said, "Okay, Yakub would ask me about the group cost." This is still under discussion, for sure. I would only tell you that it will take time because updating the transfer pricing model is really a big exercise. We want to make sure that we do it properly. We’re engaging with the third-party big four to help us in revising this. Hopefully, in the coming month, we will have an update on this.

The only thing that I can assure you is that this is already in discussion as of now. Perfect. If I may, just a follow-up on commission. I just meant specifically the GCC. Can you give us a column on that? We did not really report this level of details between GCC versus non-GCC, but I can tell you, generally speaking, so far, we do not see any contraction on the commission rates across the board, rather they are stable or slightly improving. Perfect. Thank you very much, Khaled. Thank you. Thank you. Great. Thanks. Thank you. This brings us to the end of our time and this presentation. Thank you very much for tuning in. If you do have any further questions, you can always reach out to us and the IR team at ir@talabat.com. Until the next earnings call, please stay well. Thank you very much.

Thank you all. Thank you very much.

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