Deliveroo is poised to reward shareholders as financial performance improves.
- The company’s losses reduced to £83m, a significant cut from last year’s £153m.
- An unexpected profitability milestone was reached, enhancing investor confidence.
- Deliveroo’s revenue saw a rise to £1.02bn amid challenging conditions.
- A £250m surplus capital might be returned to shareholders.
Deliveroo is on track to propose a significant shareholder payout as it builds financial confidence. The company’s losses have been curtailed to £83 million, a marked improvement from the previous year’s £153 million loss, fostering optimism among investors.
The company has achieved profitability ahead of expectations by leveraging an adjusted EBITDA metric. Will Shu, the founder and CEO, highlighted this achievement by stating, “The company fundamentally is at a very different place to when we went public 30 months ago. We are basically free cash flow break-even at this point.” This unexpected financial turnaround has bolstered the company’s position in the market.
Contributing to this financial success was a 5% increase in revenues, rising from £973 million to £1.02 billion. This growth was primarily driven by increased customer spending per order, though it has occurred in a climate where order volumes have decreased by 6% amid challenging macroeconomic conditions. Inflation has been a key factor in driving up customer expenditure per order, despite reduced transaction volumes.
Deliveroo has initiated a £50 million share purchase programme in March, following a £75 million buyback scheme completed in January. Now, the company is considering returning an additional £250 million of ‘structural surplus capital’ to its shareholders, representing a significant reward for investor patience and confidence.
Furthermore, Will Shu has articulated confidence in the sustained growth opportunities available to Deliveroo, pointing towards promising expansions in grocery and non-food retail sectors. The company’s positive outlook for the future is reflected in its upgraded 2023 adjusted EBITDA guidance to between £60 million and £80 million, an increase from the earlier forecast of £20 million to £50 million.
Deliveroo’s financial strategy demonstrates a promising path towards sustained growth and shareholder value.
