British meal delivery company Deliveroo upgraded its full-year earnings guidance on Thursday after a resilient first half in challenging market conditions that saw its total orders number fall 6%.
The company said it expected to make adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 60-80 million pounds (€69.5 million - €92.6 million) for the year, up from its previous 20-50 million pounds (€23 million - €57.9 million ) forecast.
Deliveroo reported better-than-expected EBITDA of 39 million pounds (€45 million) in the first half, as its margin improved to 1.1% in the period from 0.2% in the second half of 2022 and a negative margin of 1.5% a year ago.
The company, which had 948 million pounds in net cash at the end of the period, said it would return 250 million pounds (€289.5 million) of capital to shareholders.
The total gross transaction value of its orders increased 3%, as inflation in restaurant and grocery prices more than offset the drop in order numbers.
'Challenging Market Conditions'
Founder and chief executive Will Shu said the company delivered a strong financial performance despite challenging market conditions.
"Over the last 18 months, Deliveroo has reached adjusted EBITDA profitability ahead of plan, and we are progressing towards our goal of generating consistent positive free cash flow," he said.
Shares in Deliveroo are up 44% so far this year.
Less Discretionary Spending
The food delivery sector was among those boosted by the coronavirous pandemic, but the effect has waned as consumers, faced with surging prices, have cut discretionary spending.
In April, Deliveroo reported a 4% rise in revenue in its first quarter.
Although a 9% drop in the number of orders on its platform resulted in 1% lower gross transaction value (GTV).
Article by Reuters, additional reporting by Hospitality Ireland.