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- Food delivery company sees surge in orders in first half of year
Deliveroo has finally achieved profitability thanks to solid growth in customer order value in the first half of the year as demand stabilised.
The London-listed food delivery company, which also achieved positive cash flow for the first time, made a profit of £1.3m for the six months, compared with a loss of £83m for the same period last year.
Founder and chief executive Will Shu described the result as a “significant milestone” as the group announced share buyback plans for patient investors, who have seen Deliveroo’s share price roughly halve since its 2021 initial public offering.
Making a profit: Food delivery order volumes are back on the rise as Deliveroo anticipates an improving consumer environment
Deliveroo’s gross transaction value (a key performance measure showing the value of customer orders) rose 6 percent over the period to about £3.7 billion and beat the market consensus by around 0.5 percent.
Customers spent an average of £25 on each order, 80p more than the same period last year and helping to drive revenue up 2 per cent in constant currency to just over £1 billion.
Deliveroo order volumes returned to growth as gross transaction value rose 7 percent in the UK and Ireland, and 5 percent internationally, the latter driven by strength in France, Italy and the United Arab Emirates.
The company attributed this in part to an improvement in its consumer value proposition, as Deliveroo invested in its customer loyalty offerings.
Deliveroo, which had experienced a significant slowdown following the lockdown-induced boom, said it was now seeing “encouraging early signs in consumer behaviour”.
GTV growth is expected to be between 5 and 9 per cent for the full year, with adjusted earnings before loss in the “top half” of a range of £110m to £130m. Free cash flow is forecast to remain positive for the year.
Deliveroo also agreed a £15m share buyback, which it said “reflects financial progress over the past year and confidence in the outlook”.
Chief Executive Officer Will Shu said: We achieved two important financial milestones: positive free cash flow and positive earnings for the period.
‘Looking ahead, while there remains uncertainty in the external environment, I am encouraged by the inflection we are currently seeing in consumer behaviour in many of our markets.
‘The Deliveroo platform is more powerful than ever and we continue to respond to the external environment while continuing to optimise our proposition for consumers, drivers and merchants.
“We operate in attractive verticals, in large and under-penetrated markets, and it is clear that there is a lot of room for growth in our industry.”
Deliveroo shares rose 8.9 per cent to 138.8 pence, bringing 12-month gains to 14.9 per cent.
Adam Vettese, market analyst at eToro, said: ‘Investors are hoping that this positive figure is the start of a road to recovery for the stock after a lackluster IPO and a catastrophic 75 percent drop from its 2021 high.
‘Consumers are likely to have long-standing habits that favour home delivery and now that budget pressures could ease, there could be many more profitable Deliveroo upgrades in the future.’
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