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Delivery Hero Earnings: Strong Growth With Asia Turning Positive and Upgraded Revenue Guidance

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Securities In This Article
Delivery Hero SE
(DHER)

Delivery Hero DHER published a second-quarter trading update with gross merchandise value up 8.1% in constant currency (up 2.9% at current rates) and revenue up 16.2% in constant currency (up 11% at current rates), implying a continuous improvement in take rates to 23.3% versus 21.5% in the same quarter last year (including higher commissions from own-delivery, advertising technology revenue, service, and subscription fees). On a per-segment basis, Asia’s GMV turned positive to 2% (revenue up 3%), while GMV in the Middle East and North Africa, and Europe was up by double digits to 21% and 17% respectively, and the Americas held up well (GMV up 11% and revenue increased 11%). Integrated verticals’ GMV and revenue grew 26% and 32% respectively, with the group now planning to further rationalise 50 low-order stores in third-quarter 2023 to improve utilisation and unit economics. Delivery Hero reiterated guidance for fiscal 2023 with adjusted EBITDA as a percentage of GMV at more than 0.5% and over 1% of GMV in second-half 2023 as well as free cash flow during second-half 2023 (versus negative free cash flow of about EUR 500 million in the first half). Free cash flow excludes stock-based compensation, which amounts to about 0.8% of GMV for Delivery Hero. It confirmed 5%-7% GMV growth, but upgraded revenue growth guidance for fiscal 2023 to 15% from 10% previously, with growth expected to accelerate throughout the year. Apart from the second-quarter update, the presentation contained information on Saudi Arabia (purchased an outstanding minority stake for $297 million, adjusted EBITDA margin higher than 3% in the second quarter) and Dmarts (positive gross profit in June 2023). All in all, a strong print with solid growth in MENA and Europe as well as take rates and revenue guidance driving shares higher. We don’t expect to make material changes to our EUR 88 fair value estimate for Delivery Hero. Shares trade deep in 5-star territory despite a 10% uplift in shares on Aug. 9.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Ioannis Pontikis, CFA

Director of Equity Research in Europe
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Ioannis Pontikis, CFA, is a Director of Equity Research in Europe for Morningstar, where he covers European grocers and global food and beverage companies like Tesco, Unilever, Nestle, and Danone, and manages a team of eight analysts across the Financials and Consumer sectors. He also leads Morningstar’s Equity Research Valuation Committee, advancing the firm's valuation methodology through significant projects such as developing new methodologies, refining our valuation model, and enhancing the efficacy of our ratings.

Before joining Morningstar in 2017, Pontikis spent six years on the buy-side, co-managing a $100M long/short equity fund and leading teams in applying machine learning to stock and equity factor selection models. He developed the fund's valuation and risk assessment framework, achieving strong risk-adjusted performance. Prior to this, Pontikis worked at Nestle S.A. in Athens, focusing on financial reporting, budgeting, and auditing proposals to improve processes.

Pontikis research has appeared in numerous media outlets including Bloomberg, CNBC, Reuters, Guardian, Frankfurter Allgemeine Zeitung among others.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus’s and a master’s degree in accounting and finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation and studying towards an advanced post-masters degree in portfolio and risk management.

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