Delivery Hero ups revenue outlook on rising orders, ad revenue

By Linda Pasquini

(Reuters) -German online food takeaway company Delivery Hero raised its revenue guidance for the year on Thursday on the back of rising orders and earnings from advertising in the first quarter, sending its shares up as much as 11% on Thursday.

The company now expects revenue to rise in a range of 18%-21%, versus 15%-17% earlier, after it performed better-than-expected in an overcrowded market where some rivals are struggling to retain customers following the pandemic boom.

Revenues from advertising by consumer goods companies and restaurants on its platforms, as well as service fees and subscriptions, were better than initially expected, Chief Financial Officer Emmanuel Thomassin said in an interview.

Quarterly total segment revenue increased 21% to 3.02 billion euros ($3.23 billion) in constant currency and 17% in reported currency to 2.95 billion compared to 2.81 billion estimated by analysts in a company-provided poll.

Delivery Hero's stock was up 9.5% to 31.68 euros at 0952 GMT, having climbed 16% so far this year up to Wednesday's close.

Growth was led by the Middle East and North Africa (MENA), its second-biggest market after Asia, where revenue grew 29% in constant currency in the first three months of the year, the company said.

In the region, the company not only operates its core food delivery service and quick commerce, delivering groceries, household goods, and items such as flowers and pharmaceuticals in 20 to 30 minutes, but has also launched fintech products.

"So the engagement of the customers and the frequency of ordering (...) is growing faster than probably all the competitors and faster than all the segments," Thomassin said.

After talks for the sale of its foodpanda business in selected markets in Southeast Asia failed in February, Delivery Hero will still look at any potential deal, Thomassin said, although appetite to buy is probably lower than before due to the company's extended portfolio. "Every single transaction is a distraction, quite frankly," he said, as the company is focusing on being more profitable.

Delivery Hero operates in over 70 countries across Asia, Europe, Latin America, and MENA.

In South Korea, its core market, where according to Thomassin Delivery Hero has lost about 7% of its market share to rival Coupang, the company is launching an exclusive partnership with Starbucks and has other initiatives lined up to lure back customers.

Quarterly growth in Asia was flat in constant currency, while declining 5% in reported currency.

($1 = 0.9337 euros)

(Reporting by Linda Pasquini;Editing by Josephine Mason and Elaine Hardcastle)