Deliveroo delivers profitability boost despite order decline
19 January 2023, 09:34
The online delivery firm said underlying earnings were around breakeven for the second half, with its margin performance better than feared.
Takeaway delivery group Deliveroo said efforts to cut costs boosted its profitability, despite revealing a drop in order numbers amid a slowdown in demand after years of pandemic-boosted trading.
Total order numbers fell 2% across the group to 75.1 million in the final three months of the year, the firm said.
In the UK and Ireland, order numbers remained flat at 40.6 million.
Deliveroo saw this offset as its restaurant and grocery partners raised prices per item, with gross transaction value (GTV) lifting 6% on a constant currency basis, leaving it with growth of 7% for the full year – but this was far lower than its previous guidance for up to 12%.
However, the firm said underlying earnings were around breakeven for the second half, with its margin performance better than feared thanks in part to moves to rein in costs.
Underlying earnings are expected to improve throughout 2023, it added.
Will Shu, founder and chief executive of Deliveroo, said: “I am proud of the team delivering significant improvements in profitability whilst also still delivering growth in a difficult macroeconomic environment.
“I am particularly pleased that we have done so while improving our consumer value proposition, meaningfully increasing the selection of restaurants and grocers available on the platform.”
He added: “Amidst an uncertain outlook for 2023, we remain confident in our ability to adapt financially and to make continued progress on our path to profitability.”
The figures come as takeaway delivery firms are seeing a sharp slowdown in orders, with demand hit amid a wider pull back in consumer spending in the cost crisis, with growth also easing back after a pandemic-driven boom during 2020 and 2021.
Rival Just Eat revealed on Wednesday a worse-than-expected drop in orders over the final three months of 2022, with order numbers down 12%, with the firm also cutting costs to protect profits.
In the UK and Ireland, Deliveroo saw GTV lift 9% over the final quarter of 2022 and 9% over the full year to £3.9 billion.
This marked a significant outperformance against its international operations, excluding Australia and the Netherlands, which saw order numbers fall 5% and GTV edge 2% higher in the fourth quarter – up 3% and 5% respectively over the year.
Deliveroo announced last November it was pulling out of Australia because it would take “considerable” investment to reach a profitable scale.
