Yahoo Finance Deliveroo share price rises on higher deliveries but company losses widen
Share price at Deliveroo (ROO.L) has jumped as the takeaway delivery specialist reported higher deliveries despite widening losses.
The firm also said sales growth would slow in 2022, reflecting uncertainties including inflation and the effect of the war in Ukraine.
The FTSE-100 firm’s adjusted core loss widened to £131m last year compared to a loss of £11m in 2020, reflecting increased marketing spend and tech investment.
Orders increased by 73% to 300.6 million in 2021 but the gross transaction value (GTV) fell to £22.1, down by 80p versus 2020 as basket sizes normalised following the lifting of COVID-19 restrictions.
Will Shu, founder and chief executive officer of Deliveroo, said: “This year is clear that all three sides of our marketplace 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.”
Read more: Deliveroo shares rise as orders boost growth
“We will continue to monitor developments closely. 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.”
Deliveroo aims to reach breakeven in core earnings in around two years’ time and predicts a 15% to 20% rise in value of gross transactions on its platform this year, a slowdown from 70% last year, when it was boosted by lockdowns.
Deliveroo shares were up 7.2% early Thursday before correcting to 4.2% as the firm told investors it is on track to deliver long-term profitability.
The pretax loss for the year to the end of December was £298m compared with £213m a year earlier.
However, revenue jumped 57% to £1.82bn, as the food delivery app benefited from the closure of restaurants at the start of 2021.
Read more: Just Eat Takeway revenues up as orders jump by a third
The company has not declared a dividend and does not expect to pay any in the foreseeable future.
Dan Thomas, senior analyst at Third Bridge said: “The main thing investors will be looking at today is FY22 margin guidance. Here, Deliveroo is still guiding towards negative margins on an adjusted EBITDA basis of -1.5% to -1.8% reflecting the extent of competition in the marketplace.
“Analysts want to see a clear pathway to sustainable profitability given today’s tougher funding environment. Just Eat Takeaway’s cash-generative marketplace business clearly has an advantage in this area.”
