Food delivery firm Deliveroo has said that the value of orders on its platform more than doubled in the first half, with no material impact from the wider reopening of restaurants in its biggest market, Britain, in the second quarter.
Deliveroo chief executive Will Shu said that growth has remained strong for both restaurant and grocery orders even as pandemic-related curbs eased.
"Demand has been high amongst consumers," he said in a statement. "We have widened our consumer base, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK."
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The company, which connects customers with over 136,000 restaurants and 9,000 grocery stores in Britain and 11 other countries, said that its gross transaction value (GTV) rose 102% to £3.386 billion.
Deliveroo's shares, which were priced at 390 pence in the IPO, were trading down 4% at 348 pence as it said that it is "optimistic but prudent" about its prospects.
The company, which competes with Uber Eats and Just Eat Takeaway.com, said that it is expecting orders to continue to grow but average order values to revert towards pre-COVID-19 pandemic levels.
It reiterated the full-year forecast that it upgraded last month of 50% to 60% growth in GTV, with a full-year gross profit margin in the lower half of the 7.5% to 8.0% range.
First half revenue increased 82% to £922.5 million, Deliveroo said, while its core operating loss narrowed to £27.0 million from £30.3 million a year earlier.
Delivery Hero Takes 5.1% Stake In Deliveroo
Germany's Delivery Hero has taken a 5.09% stake in Deliveroo, driving the British company's share price to its highest since listing on the stock market in March.
Deliveroo disclosed the holding in a stock market notice.
"Delivery Hero is always looking for new investment opportunities," the German company said. "We strongly believe in the future potential of the delivery industry as a whole and therefore decided to purchase shares in one of the companies that is at its forefront."
The stake was valued at approximately £284 million, based on Friday August 6's closing price.
Online food platforms such as Delivery Hero, Deliveroo, Uber Eats and Just Eat Takeaway.com have benefited from a surge in demand during pandemic lockdowns, but some analysts question how much of that business will persist as restaurants reopen. Despite a jump in sales Delivery Hero and Deliveroo continue to make losses.
A race into new markets and early moves towards consolidation have resulted in a number of cross-shareholdings in the sector.
Founded in 2011, Delivery Hero operates in approximately 50 countries worldwide, with particular strength in Asia, where it owns the foodpanda brand.
In many countries it offers quick commerce, using its riders to deliver groceries, pharmaceutical products and electronics alongside restaurant food.
In May, it announced its return to the German market, where it competes with Takeaway.com.
Delivery Hero does not operate in Britain - Deliveroo's largest market - after selling its Hungryhouse business to Just Eat in 2016.
However, after later consolidation in Germany, it has a 7.4% stake in Just Eat Takeaway.com.
It also owns 37% of Spain's Glovo, which is considering its own listing in about three years.
Deliveroo listed with a dual-class share structure that gives co-founder and chief executive Will Shu a majority of the voting rights for three years.
It currently operates in 12 markets, including Australia, Belgium, France, Hong Kong, and Italy, but the UK and Ireland account for more than half of its orders by value.
Deliveroo did not comment further.
Shu said that he has not had any talks with Niklas Östberg, his counterpart at Delivery Hero, since the move.
"I think his view was: the stock's undervalued, I'm gonna start buying, and I know the space super well," Shu told Reuters. "This is in my view just a financial investment."
Delivery Hero To Expand In Germany After Berlin Return
Delivery Hero said that it will roll out its food and grocery delivery services in more German cities this autumn, heating up competition in the home market it quit three years ago to focus on Asia.
The group exited its home city of Berlin in 2018 when CEO Niklas Ostberg sold its German operations to Just Eat Takeaway for $1.1 billion.
As mentioned above, Östberg announced a Berlin relaunch in May and, with its food delivery and quick commerce markets now up and running in four districts of the capital, Frankfurt, Hamburg and Munich will follow this autumn.
"The pace of our expansion will definitely accelerate," Delivery Hero's head of German operations, Artur Schreiber, told Reuters in an interview.
Established players like Delivery Hero face intense competition from a crop of newer, well-funded startups running networks of 'dark stores' that can dispatch groceries ordered on a smartphone app to the doorstep within minutes.
Analysts predict a shakeout once the pace of growth slows and Delivery Hero, a constituent of Germany's DAX blue-chip share index, has built equity stakes in a number of its peers in a move that could herald industry consolidation.
Delivery Hero Quarterly Revenues More Than Double
Delivery Hero's quarterly revenues more than doubled, and it is considering notching up its investments beyond the initial plan, as it seeks to ride the first-half momentum to win more market share, the German online food takeaway firm's finance chief has said.
The Berlin-based group raised its 2021 revenue and gross merchandise volume outlook earlier in the day, but tweaked its forecast for adjusted core operating margin to minus 2%, at the lower end of previous forecast.
"The small implied downgrade to consensus EBITDA [earnings before interest, tax, depreciation and amortisation] today comes at a difficult time," Jefferies said after the earnings report.
The group returned to its home market Germany earlier this year at a time of a furious boom in rapid delivery there that pits it against start-ups like Gorillas that are attracting lavish backing from venture capital investors.
With demand for at-home deliveries surging during the pandemic, Delivery Hero has invested extensively both in food delivery and in the so-called quick commerce, which aims to deliver goods in as little as 10 to 15 minutes.
"We are considering to invest a little bit more," Delivery Hero chief financial officer Emmanuel Thomassin told reporters. He said that those will be investments in core operations while the €550 million full-year investment goal for new markets remained unchanged.
The company, which operates in about 50 countries across Europe, Latin America, Asia, the Middle East and North Africa, now sees revenues in a range of €6.4 billion to €6.7 billion for the year compared to earlier expectations of €6.1 billion to €6.6 billion.
It more than doubled quarterly revenues to €1.55 billion, on continued strong demand for its food and rapid delivery services even as pandemic-related restrictions are eased across its markets.
However, Östberg said that it will take time before investments in quick delivery began paying off.
"Quick delivery will be a huge part of Delivery Hero, but the margins in groceries are incredible low," Östberg told Reuters. "In order to make it economical we need to innovate and improve. It is still a long way to go."
When asked earlier about the 5.09% Deliveroo stake it has taken, Oestberg said that it makes financial and strategic sense, without elaborating further.