Deliveroo orders double in first results since IPO

Deliveroo narrowed its pre-tax losses by almost a fifth to £104.8 million (€123.5m) in the first half as revenue rose 82 per cent to £922.5 million and orders doubled, the food delivery company said in its first results since March's initial public offering (IPO).

The London-based company delivered 148.8 million meals and groceries in the first six months of 2021, twice as many orders as in the same period a year ago. Monthly active consumers increased 81 per cent year-on-year to 7.8 million people.

While food delivery services have been a big beneficiary of pandemic lockdowns, Deliveroo said it had seen “no material impact” from the UK lifting most of its Covid-19 restrictions.

“The growth momentum in the second quarter is still really strong,” said Will Shu, chief executive and co-founder of Deliveroo. Increased grocery orders and the Euro 2020 football championship had boosted growth, he added. “We had a great first half.”

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Gross transaction value, which measures customer spending, rose 110 per cent in the UK compared with the first half of last year. The company’s UK expansion is “well ahead” of its target, and its services can now reach 72 per cent of the population.

“The vast, vast, vast majority of our growth comes from areas we were in a year previously,” Mr Shu said.

Despite worker shortages affecting other parts of the economy, especially in hospitality, Mr Shu said 90 per cent of the couriers delivering for Deliveroo in May and June were still working during July. The company is receiving 14,000 new rider applications a week, "which is no different than it was during Covid".

Deliveroo’s margin on its gross transactions, minus cost of sales, fell by one percentage point to 7.8 per cent. The company warned that the margin for 2021 would be “in the lower half of the range” it had previously given of 7.5 per cent to 8 per cent because of increased investment in growth and anticipated fall in average order value.

Marketing

Mr Shu said Deliveroo was spending more on marketing to acquire new customers and drive subscribers to its Plus service, which offers reduced delivery fees for a monthly subscription.

Shares in Deliveroo were down almost 4 per cent at 349p on Wednesday morning. Ahead of the figures Deliveroo's shares had risen about 12 per cent this week to 363p after German rival Delivery Hero disclosed a 5 per cent stake on Monday.

However, Deliveroo has yet to return to the 390p price at which it initially went public, after falling by more than a quarter on its first day of trading.

Mr Shu told Reuters he saw Delivery Hero’s stake as “just a financial investment”.

Last month Deliveroo said it was planning to close its Spain business as the country moved to give gig workers more rights. Mr Shu said the regulatory changes had "sped up" its exit from Spain "but it was a decision we were going to make anyway" given Deliveroo's "weak market position".

Despite an investigation into its working practices in Italy, Mr Shu indicated that Deliveroo was committed to that market.

“The regulatory environment is completely different,” he said, and Deliveroo had since changed its worker model, while its market position was “extremely strong”. – Copyright The Financial Times Limited 2021