-- Targeted investments in strategic initiatives such as SMART!, the focus on "retail basics" and improvements to user experience on the platform have accelerated the flywheel, resulting in accelerating growth over time: GMV grew at 13.9% and 25.4% for the years ended December 31, 2018 and December 31, 2019, respectively. This acceleration was also evident at the start of 2020, prior to the impact of COVID-19, with GMV growing ahead of 2019 growth in both January and February 2020. During the March to May period, when offline stores were closed for all or part of the month, the Group saw significantly higher monthly GMV growth of 47%, 85% and 73% in March, April and May, respectively. The Group has continued to note much stronger GMV growth in June through August, following the reopening of offline stores in Poland, than in the period immediately preceding the COVID-19 lockdown, with GMV growth of 57%, 48% and 51% in June, July and August, respectively. -- The strong growth in GMV, coupled with moderate take rate increases, as well as high growth from the Group's advertising and price comparison businesses, have further driven net revenue growth at a rate in line with or faster than its GMV growth. Net revenue grew 19.0% and 31.1% over the years ended December 31, 2018 and December 31, 2019, respectively. For the six months ended June 30, 2020, the Group's net revenue grew 51.8%. -- The Group has also achieved high profitability and cash conversion levels, driven by its asset-light 3P business model. As a result, from 2017 to 2019, the Group maintained Adjusted EBITDA/net revenue that consistently exceeded 50% and Adjusted EBITDA/GMV of approximately 6%, with Adjusted EBITDA growing at an 18.5% CAGR over the period. Several key investment initiatives, in particular SMART!, which launched in 2018, have resulted in decreasing margins over time with Adjusted EBITDA/net revenue margins reaching 45.6% and Adjusted EBITDA/GMV of 5.0% in the six months ended June 30, 2020. The Group believes these investments are key to accelerating the "flywheel" and continuing to drive overall growth. Adjusted EBITDA grew 28.0% in the six months ended June 30, 2020. -- The Group benefits from limited capital expenditure requirements due to its fully invested and asset-light business model. The Group has also benefited from high free cash flow generation while also managing to reduce net leverage, with net leverage decreasing from 5.1x net debt/Adjusted EBITDA for the preceding twelve months as of June 30, 2019 to 3.7x as of June 30, 2020.
Allegro's distinctive buyer and merchant-centric culture is nurtured by its highly experienced management team
-- Allegro is led by a highly experienced and entrepreneurial management team with complementary skill sets and proven track records of driving innovation. -- The Chairman, CEO and the rest of the executive leadership team bring extensive experience at leading e-commerce, technology, consulting and/or financial institutions. The 86 individuals in the broader leadership team have an average of 15.2 years of business experience and 5.2 years at Allegro. -- Allegro's management team has built a creative workplace for its employees, fostering a diverse, collegial and entrepreneurial culture underpinned by teamwork, commitment, continuous professional development and maximization of value for all stakeholders. -- In a survey conducted in April, 2020, approximately 93% of Allegro employees said they would recommend Allegro as a great place to work; 91% considered Allegro an inclusive workplace; and 90% believe Allegro has open communications. The Group has achieved a 78% engagement index in 2020, higher than the 73% average for technology companies with over 1,000 employees globally.[5] -- Allegro has more than 2,400 employees. It enjoys access to a rich market for technology talent in Poland and has one of the largest tech development team in Poland with more than 850 employees in engineering roles working from five tech hubs across the country.
Future strategy
Allegro's strategy is to offer buyers and merchants continuously improving, unparalleled value. The Group will seek to achieve this through a combination of a focus on "retail basics" relating to its platform in Poland, supported by complementary strategic initiatives and potentially supplemented by international expansion. These initiatives include:
-- Enhanced buyer and merchant experience: The Group continues to develop and invest in the buyer and merchant experience and is focusing on a number of initiatives, including further automating and optimizing key merchant processes, advancing search, discovery and sales conversion, improving engagement with mobile web and app users, expanding product assortment breadth with a focus on bringing more Polish and international merchants onto the platform, improving price competitiveness, enhancing SMART! and improving delivery experience for buyers . -- Further expansion of SMART! and delivery services: As of June 30, 2020, only 17% of active buyers had SMART! subscriptions, which leaves significant room for further growth. Allegro aims to continue building on its successes in delivery experience, by increasing the proportion of one/two-day delivery share with a particular focus on next day delivery, further growing the network of out-of-home lockers and pick-up/drop-off points, expanding into innovative delivery services, including scaling up of same day deliveries, and the introduction of "ultra-fast" or "instant" deliveries. These initiatives will be supported by the launch of Allegro Fulfilment, which will be used as a supplementary tool in select cases, such as for international sellers and other selected merchants, in an effort to improve delivery time and ensure delivery promise accuracy. -- Further expansion of advertising and price comparison: Allegro believes there is significant potential to increase advertising revenue through further monetization of its broad reach, improvements in ad technology and favorable online advertising market trends. The Group believes it is well positioned to capture a large share in digital advertising via scalable, automated and AI-driven advertising solutions leveraging the Group's traffic and data. The Group also benefits from operating Ceneo, which is the top price comparison platform in Poland, resulting in increased traffic directed to the Group's e-commerce marketplace, and provides an expanded advertising reach. -- Raising ambition in FinTech: The Group has built a successful financial services business using a third-party model over the years. The Group, however, believes there is significant potential in integrating its financial services with its core platform to better address the market opportunity in Poland, estimated to be approximately PLN 300 billion across consumer credit and SME lending[6]. The Group recently launched Allegro Pay, Allegro's own FinTech offering, with beta-testing expected to continue until the end of 2020. -- Broadening platform and geographic expansion: The Group believes there are various opportunities to strengthen its current business footprint into certain related opportunities which include B2B, international inbound sellers, as well as adjacent verticals in which Allegro is not currently active or runs subscale operations, or through expanding value chain solutions such as logistics. The Group also has the ambition to grow outside of Poland in the medium-term.
Recent Trading
There has been no significant change in the financial or trading position of the Group since June 30, 2020. However, the Group has continued to note strong GMV growth of 48% and 51% in July and August, respectively, based on the Group's internal management accounts. Factors include continued strong additional demand associated with increased e-commerce penetration resulting from changed buyer behavior following the COVID-19 pandemic lockdown.
Offering Highlights
Should the Group proceed with the IPO, it is expected to have the following features:
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