(Bloomberg) -- Deliveroo Plc’s loss widened less than analysts had estimated after the company generated sales from its new ad platform and increased average customer fees.
The loss on adjusted earnings before interest, taxes, depreciation and amortization widened to about £68 million ($82.1 million) in the first half of the year, compared to a loss of £25.8 million a year earlier, the company said in a statement on Wednesday. That was better than the average analyst estimate for a loss of £73.3 million, according to a Bloomberg survey.
Deliveroo is looking for new ways to increase revenue and cut costs after delivery companies across the industry were hit with worse-than-expected slowdowns in order growth. Then in July, the London-based food delivery company slashed its projections for order growth this year after customers were hit with higher energy bills and inflation.
“How long this macro environment lasts for, I have no idea,” Chief Executive Officer Will Shu said in an interview. “What I’d say is the profitability gains are very apparent despite the top-line being weaker than we’d like. We’re taking market share gains in our key markets. The consumer value proposition has gotten much better.”
- Revenue rose to £1.01 billion in the period. That compares to the £985 million forecast by analysts in a Bloomberg survey.
- The company reiterated its guidance for 4% to 12% gross transaction value growth for the year. That was down from a previous forecast of 15% to 25%.
- Deliveroo proposed ending its operations in the Netherlands. The country accounted for 1% of GTV in the first half.
- GTV for the half was £3.56 billion compared to an estimate of £3.67 billion.
- Deliveroo has stepped up efforts to generating more cash, rolling out an advertising platform and outlining plans to reach break-even status in the next couple of years.
- The company said it had discontinued its operation in Spain, announcing last year that the level of investment required to maintain a top competitive position was too great.
- While macro concerns are likely to remain as a persistent theme, “it is encouraging to see the group making progress on its pathway to profitability,” Goodbody analyst David Brohan said.
- Rival Just Eat Takeaway.com NV wrote down the value of its US-based Grubhub business by 3 billion euros ($3.1 billion), reported that orders slowed in the first half of the year, and said it would cut jobs in France.
- Shares rose 0.8% to 92 pence at 8:26 a.m. London time. The stock has declined 56% this year.
- Deliveroo sold shares in an initial public offering in March of last year at 390 pence apiece.
- Rivals including Just Eat and Delivery Hero SE have also seen shares decline this year, 65% and 52% respectively through Tuesday.
- After $30 Billion Rout, Food Delivery Firms Face Growth Slowdown
- Deliveroo Slashes Forecast After Consumers Cut Back Orders
- Just Eat Takeaway Records 3 Billion-Euro Hit on Grubhub
(Updates with share price, Dutch exit plans)
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