Deliveroo losses widen with warnings of future cost pressures
Deliveroo has reported widening losses of £131m as the food delivery firm warned of the impact of hiked costs.
The firm said its core adjusted loss had widened compared to a loss of £11m in 2020, citing increased marketing spend and investment into technology.
However, revenue soared 57 per cent, with food delivery apps benefiting from the closure of restaurants at the start of 2021.
Deliveroo anticipated its EBITDA would be in a range of minus 1.5 to 1.8 per cent for 2022.
The delivery app is set to “face headwinds due to inflationary pressures, the removal of economic stimulus and the broader geopolitical and economic impacts of the conflict in Ukraine,” Will Shu, founder and CEO, said.
He added: “Our 2022 guidance reflects our caution on these factors, but we are confident in our ability to adapt financially to a rapidly changing macroeconomic environment.”
The company said it aims to hit an adjusted EBITDA margin of plus four per cent by 2026, when it anticipates an expansion of gross profit margin and reduction of marketing and overheads.
The London-listed company said it hoped to hit breakeven in core earnings in 2023 or 2024.
The firm anticipated a 15-25 per cent in the value of gross transactions via its app this year. This represents a slowdown in previous growth, when Covid lockdowns pushed 70 per cent growth last year.
Dan Thomas, senior analyst at Third Bridge said: “The main thing investors will be looking at today is FY22 margin guidance. Here, Deliveroo is still guiding towards negative margins on an adjusted EBITDA basis of -1.5 to -1.8 per cent reflecting the extent of competition in the marketplace.
“Analysts want to see a clear pathway to sustainable profitability given today’s tougher funding environment. Just Eat Takeaway’s cash-generative marketplace business clearly has an advantage in this area.”