Deliveroo Revenues grow. Orders fall. But the company’s confidence in its ability to generate cash is growing!

Deliveroo Revenues grow. Orders fall. But the company's confidence in its ability to generate cash is growing!

Deliveroo plans to return a further £250mn to shareholders, after losses halved in the first half of the year.

“The company fundamentally is at a very different place to when we went public 30 months ago,” said Will Shu, Deliveroo’s Founder and Chief Executive shared with Financial Times. “We are basically free cash flow break-even at this point.”

Deliveroo reported that pre-tax losses narrowed from £127.1mn in the first half of last year to £57.6mn in the first six months of 2023. Revenue rose 5% to £1bn, thanks to a 10% increase in customer spending per order to an average of £24.20, driven partly by inflation. Order volumes, however, fell 6% to 145.2mn.

Deliveroo cut its annual forecast for gross transaction value, a measure of customers’ total spending on its app as well as other fees, to “lower single digits” percentage growth, but raised its guidance for adjusted earnings for 2023 from £20mn-£50mn to £60mn-80mn.

The stock is still trading well below Deliveroo’s initial public offering price of 390p. However, the stock this year has risen more than 40% as profitability comes within reach.

“We feel very confident in our position,” said Shu.

Deliveroo had previously announced a £50mn share purchase programme in March, after completing a £75mn buyback scheme in January. The extra £250mn will be returned to shareholders through a special dividend, share buybacks or a tender offer, Shu said, pending consultation with shareholders.

“We have ample cash on the balance sheet for growth and unforeseen circumstances,” said Shu to Financial Times, with net cash of £948mn at the end of the first half, so it was “time to give this back to shareholders”.

Shu said that the move reflected investors expectations for a much faster return from equities now that interest rates have risen.

Deliveroo this year plans to set out its longer-term vision for investors, which Shu said would include a push into “adjacent verticals”, after recent moves to deliver groceries and non-food items.

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