Deliveroo: Delivery group posts profit, launches buyback amid ‘encouraging’ signs in consumer behaviour
Deliveroo posted a profit of £1m in the first half of 2024, rebounding from a loss of £83m in the same period last year.
Shares rose over six per cent on Friday morning as gross transaction value (GTV) came in just under £3.7bn, up five per cent year on year from £3.5bn.
The food delivery app, which also reached a positive free cash flow of £3m, said there was good GTV growth in both the UK and internationally, especially in France amid “encouraging” signs in consumer behaviour.
Deliveroo reported half year adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £62m, up 57 per cent from the £39m it posted a year ago.
It saw strong growth in its grocery division and it said its retail site rollout with major brands in the UK and UAE is “showing early signs of progress”.
Deliveroo added that it now expected to report adjusted EBITDA in the upper half of its previously guided range of £110m to £130m for the year. The firm said it expected GTV growth of between five and nine per cent.
In 2023, Deliveroo logged its first profit of £85m, up from a loss of £45m in 2022.
Julie Palmer, partner at Begbies Traynor said Deliveroo is “accelerating fast” while many retailers are struggling with cooler consumer demand and tighter purse strings.
But she warned that “Deliveroo has seen its monthly active customers and average orders stay relatively flat for a long time. As consumer confidence starts to return, Deliveroo should look to boost these numbers and win new customers in order to cement its share of an increasingly competitive market.”
The company also outlined plans today to buyback up to £150m. The company said this “reflects financial progress in the last year and confidence in the outlook.” It ended the period with net cash of £662m.
Will Shu, founder and chief executive of Deliveroo, said: “Looking ahead, while there is continued 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 remain responsive to the external environment while continuing to optimise our proposition for consumers, riders and merchants.
“We operate across attractive verticals, in large, underpenetrated markets, and it’s clear that there is a lot of room for growth in our industry. I want to thank the Deliveroo team whose talent and expertise is invaluable as we continue to capture the many opportunities ahead of us,” he added.
Shares in the London-listed company are up more than five cent over the past year. Analysts at Panmure Liberum said, now that the LSE’s listing rules also now having changed, “FTSE 250 entry could be on the table very soon,” for the stock.