Losses at Deliveroo rose last year after it spent more money on marketing and technology, as the London-based food delivery company warned it would remain unprofitable until at least mid-2023.
Shares in the company, which have lost more than two-thirds of their value since being listed in London nearly a year ago, rose a whopping 7 percent to 123p in early trading in London after Thursday’s results, as Deliveroo reported smaller losses than analysts had predicted.
Will Shu, CEO of Deliveroo, said its performance in the UK and Ireland was “particularly encouraging” as it was profitable in its largest market based on adjusted earnings before interest, taxes, depreciation and amortization. However, he also warned against “caution” for the coming year.
Takeout app companies have come under pressure from investors to turn a profit after a few years of revenue growth during the pandemic.
After pandemic lockdowns boosted takeout revenues, online delivery platforms are now facing a much more difficult macroeconomic environment as food price and wage inflation starts to bite.
Competition between Deliveroo, Uber Eats and Just Eat in the UK remains fierce, and those companies are also facing new challenges from grocery delivery start-ups like Getir and Gopuff.
Deliveroo said Thursday that growth in transaction volumes would slow to 15-25 percent this year at constant exchange rates, compared to 70 percent in 2021, but losses as a percentage of transaction volumes would diminish.
“This year it is clear that all three sides of our market [customers, couriers and restaurants] Europe will experience headwinds due to inflationary pressures, the loss of economic stimulus and the wider geopolitical and economic impact of the conflict in Ukraine,” said Shu, who co-founded Deliveroo in 2013. , but we are confident in our ability to financially adapt to a rapidly changing macroeconomic environment.”
Shu said Deliveroo wanted to break even on an underlying basis “at some point” between the second half of 2023 and the first half of 2024.
Total revenues rose 57 percent to £1.82 billion in 2021, while pre-tax losses rose 40 percent to £298.2 million. Orders rose 73 percent to 300.6 million.
After raising £1.1 billion in net proceeds from last year’s IPO, the debt-free company closed the year with £1.3 billion in cash and equivalents.
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