Deliveroo’s 2022 In Line, Guidance Light on Top-Line Growth; Shares Attractive
Following its fourth-quarter trading update in January, no-moat Deliveroo ROO reported 2022 results with an adjusted EBITDA loss of GBP 45 million for the year (negative 0.7% of gross transaction value, or GTV, excluding recent market exits of Australia and the Netherlands) and GBP 6.6 million in the second half, in line with previous guidance. As a reminder, GTV for the year was up 9% (up 6% at constant currency) and orders down 2% (versus Just Eat Takeaway’s GTV down 2% and orders down 12% in the same period). GTV and orders in its core U.K. and Ireland market were robust, up 9% and flat, respectively, implying market share gains (versus Just Eat’s GTV down 3% and orders down 10% in the U.K. and Ireland) with more monthly active consumers on a sequential basis in the U.K. to 4.1 million from 3.9 million, and flat year on year mainly due to seasonality.
More importantly, Deliveroo provided guidance for 2023, with the company expecting low- to mid-single-digit growth in GTV (with growth improving through the year and broadly flat in the first quarter) and adjusted EBITDA to further improve in the range of GBP 20 million-GBP 50 million, weighted to the second half of the year. Although bottom-line guidance is in line with company-compiled consensus of about GBP 35 million for the year, top-line guidance came slightly short of our and consensus’ expectations (low to midsingle digits versus 6% for consensus). We do not expect to materially change our GBX 215 fair value estimate. Shares trade deep in 5-star territory.
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