Losses at Deliveroo widened last year after it spent more money on marketing and technology, as the London-based food delivery company warned that it would remain unprofitable at least until mid-2023.
Shares in the company, which have lost more than two-thirds of their value since they were listed in London almost a year ago, rose as much as 7 per cent to 123p in early London trading after Thursday’s results, as Deliveroo reported narrower losses than analysts had forecast.
Will Shu, Deliveroo chief executive, said its performance in the UK and Ireland was “particularly encouraging”, as it reached profitability in its largest market on the basis of adjusted earnings before interest, taxation, depreciation and amortisation. However, he also warned of “caution” about the year ahead.
Takeaway app companies have come under pressure from investors to deliver profits after a bumper couple of years of revenue growth during the pandemic.
After pandemic lockdowns boosted takeaway services’ revenues, the online delivery platforms are now facing a far tougher macroeconomic environment, as food price and wage inflation begins to bite.
Competition between Deliveroo, Uber Eats and Just Eat in the UK remains intense, and those companies are also facing fresh challenges from grocery delivery start-ups such as Getir and Gopuff.
Deliveroo said on Thursday that growth in transaction volumes would slow to 15-25 per cent this year on a constant currency basis, compared with 70 per cent in 2021, but losses as a proportion of transaction volumes would narrow.
“This year it is clear that all three sides of our marketplace [customers, couriers and restaurants] in Europe will face headwinds due to inflationary pressures, the removal of economic stimulus and the broader geopolitical and economic impacts of the conflict in Ukraine,” said Shu, who co-founded Deliveroo in 2013. “Our 2022 guidance reflects our caution on these factors, but we are confident in our ability to adapt financially to a rapidly changing macroeconomic environment.”
Shu said that Deliveroo aimed to reach break-even, on an underlying basis, “at some point” between the second half of 2023 and the first half of 2024.
Overall revenues rose by 57 per cent in 2021 to £1.82bn, while pre-tax losses rose 40 per cent to £298.2mn. Orders grew 73 per cent to 300.6mn.
After raising £1.1bn in net proceeds from last year’s initial public offering, the debt-free company ended the year with £1.3bn in cash and equivalents.
