British meal delivery company Deliveroo said it would make up to £50 million (€56.9 million) in core earnings this year after achieving a better-than-expected positive margin in the second half of 2022 as its focus on profitability started to pay off.
The company reported an adjusted core loss of £70.5 million (€80.2 million) for 2022, in line with analyst expectations.
Despite what it described as 'challenging market conditions,' Deliveroo reported a 30% increase in gross profit, a 14% increase in revenue, and a 9% increase in gross transaction value (or GTV) year-on-year (or 7% in constant currency).
The food delivery firm also gained market share in key international markets such as France and Italy, as well as in the UK & Ireland market, it said.
Deliveroo also improved its consumer value proposition by becoming a 'leading on-demand grocery service', it added which accounted for 11% of GTV in the second half of 2022 and had over 18,000 sites at the end of 2022.
Additionally, the company implemented a measured roll-out of Deliveroo Hop and Hop as a Service.
"I'm proud of our performance in the past 12 months," commented founder and CEO Will Shu. "Our team has delivered in difficult market conditions, with continued growth and share gains in our key markets. I'm particularly pleased that the company reached adjusted EBITDA profitability in the second half of last year.
"This is a significant step on our path to sustainable cash generation, and we achieved this milestone a year earlier than our guidance by executing our strategy successfully despite headwinds from the market environment."
Deliveroo launched in Qatar in October 2022 and exited from the Australia and Netherlands markets in November 2022.
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Commenting on its performance analyst Russ Mould of AJ Bell said, “There are two big problems looming over Deliveroo. Households with less money in their pocket are unlikely to casually order in food on a regular basis and, as we have emerged from the pandemic, there are competing demands for any disposable cash they do have.
“Undoubtedly there will still be an appetite for ordering food through an easy-to-use platform but fierce competition in a market which also features big names like Just Eat and Uber Eats makes turning a profit hard.
“There’s no reason for people to be anything other than platform agnostic. It’s very hard to stand out and that means heavy marketing spend to stay front and centre in people’s minds.
“The company is still burning through lots of cash and although it is attempting to signal to the market that the inflexion point, when it starts to deliver meaningful cash flow and profit, is not too far away, a more difficult economic backdrop could stymie its efforts in this regard.”
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