Deliveroo cuts losses and sees orders double in first half of 2021

Pre-tax losses drop to £104.8m, while orders soar to 148.8m

Will Shu, founder and chief executive of Deliveroo, said consumer behaviour 'may moderate later in the year'. Courtesy: Deliveroo

Deliveroo cut its pre-tax losses by almost a fifth to £104.8 million ($144.89) in the first half of 2020, as revenue surged 82 per cent to £922.5m and orders doubled, the British food delivery firm said on Wednesday in its first results since its disastrous initial public offering.

The London-based company said the value of the orders on its platform more than doubled to 148.8 million in the first six months of 2021, compared to the same period a year ago.

The firm, which connects customers with more than 115,000 restaurants and grocers in the UK and 11 other countries, including the UAE, said its gross transaction value (GTV) - a measure of the total goods ordered including fees - rose 102 per cent to £3.39 billion.

Will Shu, founder and chief executive of Deliveroo, said the strong performance in the first half of the year showed the company is continuing to make progress.

"As a result, I believe that we are well positioned to take advantage of the huge opportunity ahead,” Mr Shu said in a statement on the London Stock Exchange, where its shares are listed.

"We are seeing strong growth and engagement across our marketplace as lockdowns continue to ease.”

The company said the strong value of orders on its platform indicate no material impact from the wider reopening of restaurants in the UK - its biggest market - in the second quarter.

"As reflected in our guidance, whilst we expect that consumer behaviour may moderate later in the year, we remain excited about the opportunity ahead and our ability to capitalise on it,” Mr Shu said.

Food delivery companies have been one of the biggest gainers during the pandemic lockdowns in the UK, as consumers turned to take-outs instead of dining out.

However, GTV in the UK market rose 110 per cent in the first six months of 2021 compared with the first half of last year, while its UK expansion is also firing up with its services now able to reach almost three-quarters of the population.

Meanwhile, international GTV was up 95 per cent during the same period, reflecting differing patterns of reopening around its overseas bases as well as the varying impact of lockdown restrictions in each country.

Adam Vettese, analyst at multi-asset investment platform eToro, said Deliveroo is slowly winning over the doubters “after a calamitous start to life as a public company”.

“The takeaway delivery service’s shares have risen strongly over the past five months since its disastrous March IPO, dubbed the ‘worst in London’s history’, netting ‘day one’ investors a return of nearly 30 per cent,” Mr Vettese said.

“Its order numbers and value have come in well ahead of expectations in the first half of the year, while its cash position has been materially boosted by the IPO.”

Ahead of the half-year results, Deliveroo has seen its share price rise about 12 per cent this week to £3.63 by the end of Tuesday after German rival Delivery Hero disclosed it had a 5.1 per cent stake in the company.

The deal makes Delivery Hero a top-10 shareholder in Deliveroo, with the move offering a much needed boost to its share price after its disastrous debut on the LSE on March 31, that saw more than £2bn wiped off the company's £7.59bn value.

However, Deliveroo is yet to achieve the £3.90 price it initially went public with. On Wednesday, the share price dipped 1.49 per cent to £3.57 at 8.55am London time.

Mr Shu said he had not had any talks with his counterpart at Delivery Hero since the Berlin-based company took a stake last week, adding he viewed the move as financial.

"I think his (Delivery Hero's chief executive Niklas Oestberg) view was: the stock's undervalued, I'm gonna start buying, and I know the space super well," he said in an interview on Wednesday after Deliveroo published its first-half results.

"This is in my view just a financial investment."

Looking ahead, Mr Vettese said critics of the company continue to challenge Deliveroo’s business model and the way it treats its workers, as well as the fact it has still never turned over a profit, “although this is largely down the fact it is investing heavily in growth”.

“Eventually, investors will want to see both of those concerns rectified. If Deliveroo can’t do that, then it may find it a struggle to attract investors’ cash, regardless of whether its numbers impress or not,” Mr Vettese said.

Mr Shu maintained that demand for its service had been high, as the company widens its consumer base.

“We have, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK,” he said.

The company also reported strong employee satisfaction, with 85 per cent of riders globally saying they are satisfied or very satisfied working with the company as rider attraction and retention rates remain high despite rising job vacancies across economies.

"More riders are choosing to continue to work with the company because they value the work we offer,” Mr Shu said.