Deliveroo raises profit guidance on back of surging orders

Tie-ups with retailers such as B&Q, Screwfix and Ann Summers have helped Deliveroo to raise its profit forecast, after the food delivery group recorded a strong uptick in orders.

The FTSE 250 firm, which debuted on the London Stock Exchange in 2021, told shareholders that adjusted underlying profit for the year to 31 December is likely to come in at the upper end of its £110 million to £130 million guidance.

Will Shu, Deliveroo’s founder and chief executive, said that “strong growth in groceries” and an expanding product range have enabled the business to “bring even more of the neighbourhood to consumers’ doors”. Over the past year, the company partnered with several well-known retail names including The Perfume Shop and Not On The High Street.

Deliveroo said its total number of orders increased by 3 per cent to 77.5 million during the final quarter of last year, with the UK and Ireland contributing 43.1 million of these orders—a 5 per cent jump on the same period in the previous year.

Overseas markets proved more mixed. While the UAE and Italy saw continued growth, France showed “some ongoing market softness” and Hong Kong remained “difficult” due to strong competition from Chinese rival Meituan, which entered the market in May 2023.

Sean Kealy, an analyst at Panmure Liberum, suggested that Deliveroo might consider withdrawing from Hong Kong given the challenging environment there.

Deliveroo’s gross transaction value (GTV)—the total cost of all food orders plus delivery charges—rose by 7 per cent to £1.97 billion in the three months to December. Quarterly revenue, which excludes payments to restaurants and riders, increased by 6 per cent to £545 million.

For the whole of last year, revenue amounted to £2.07 billion, a 3 per cent uplift, while total GTV climbed 6 per cent to £7.4 billion from 296 million orders.

Founded in London in 2013, Deliveroo now operates in ten markets with around 180,000 restaurant partners, employing about 140,000 riders. Shu, who once personally delivered pizzas, retains a 6.1 per cent shareholding in the business, while Amazon is the biggest shareholder, holding 13.7 per cent.

Though Deliveroo’s 2021 initial public offering was seen by some as disappointing—its shares sank by almost a third on debut—Thursday’s upbeat trading update lifted the stock by 6.6 per cent, closing at 138p.