UK food delivery firm Deliveroo targets breakeven in two years

By Paul Sandle

LONDON (Reuters) -Britain's Deliveroo set out a path to profitability on Thursday, saying it would break even in about two years as the proportion of revenue spent on marketing in the competitive food delivery sector falls.

The company, which competes with Just Eat Takeaway.com and Uber Eats, remained cautious about the short-term outlook, forecasting a slowdown in growth as the economic environment worsens for consumers and its restaurant partners.

The company predicted a 15% to 25% rise in the value of gross transactions (GTV) on its platform this year, a slowdown from 70% in 2021 when lockdowns boosted its first half.

"When we look at the three sides of our marketplace - the riders, the merchants and the consumer - we do see some headwinds, mostly coming from inflationary pressures," Chief Executive Will Shu told Reuters.

"We are setting cautious guidance for 2022, but overall we are very, very enthusiastic about the future."

Deliveroo reported a 57% rise in revenue to 1.82 billion pounds on 6.6 billion pounds of orders, but its adjusted core loss widened to 131.4 million pounds from 10.8 million pounds, reflecting technology investment and increased marketing spend to drive awareness and acquire new customers.

Deliveroo, which is expanding its grocery delivery service and its restaurant business, said it aimed to reached adjusted core earnings breakeven in the second half of 2023 or first half of 2024, and achieve a positive margin of 4% by 2026.

Shares in Deliveroo, which have lost more than two thirds of their value since listing at 390 pence in March 2021, were trading up 8% at 126 pence.

Analysts at Bernstein said guidance for this year was potentially disappointing but longer term guidance and disclosure was positive.

($1 = 0.7590 pounds)

(Editing by William Schomberg and Edmund Blair)