Deliveroo raises profit expectations despite declining order numbers

Deliveroo expects full-year profit to exceed the upper end of expectations, after modest growth in the fourth quarter and despite a decline in order volumes.

The food delivery group expects adjusted profit before nasties to be ‘slightly above’ its 2023 guidance range of £60m to £80m.

Deliveroo raised its profit forecast in August from a previous forecast of £20 million to £50 million, thanks to rising advertising revenues that offset a decline in order volumes in the first half of the year.

Deliveroo’s total orders fell by around 9 million to 290.2 million in 2023 as cost-of-living pressures put more consumers off takeaways.

Still, gross transaction value (GTV) – the total value of orders processed on the platform – rose 3 percent at constant exchange rates to £7.06 billion, which was in line with expectations.

In the final three months of the year, the company’s GTV rose 4 percent to £1.86 billion, thanks to a return to international growth and strong trade across the British Isles.

At the same time, sales rose by £2 million to £523 million, with rising revenues in Britain and Ireland offsetting lower international sales.

Deliveroo attributed the modest gain to investments in consumer benefits and a shift in spending towards promotional marketing activities.

Will Shu, co-founder and CEO of Deliveroo, said he was “very proud of the team’s performance in the fourth quarter, including the launch of our retail offering.”

The London-listed company recently launched a ‘shopping’ section where customers can purchase products such as healthcare, flowers, DIY and electronics.

Shu added: “As we saw continued signs of stabilization in consumer behavior this quarter, we continued to invest in the consumer value proposition to lay the foundation for future growth.”

Deliveroo shares were 2.3 per cent lower at 131.7p on Friday afternoon, meaning they have lost around two-thirds of their value since the company’s disastrous listing in March 2021.

Since its inception, the group has struggled to turn a profit due to rising marketing, technology and staff costs as it tried to compete with rival delivery apps such as Just Eat and Uber Eats.

This is despite orders skyrocketing, especially during the early part of the Covid-19 pandemic lockdowns.

Early last year, Deliveroo said it would cut around 350 jobs after orders slowed due to a lack of lockdown restrictions and worsening inflationary pressures.

Following a decline in the company’s half-year losses, Deliveroo returned £250m to shareholders in a premium offer.