British meal delivery company Deliveroo said it had achieved the twin milestones of profit and free cash flow in the six months to end-June as demand from customers stabilised.
It reported profit of £1.3 million (€1.51 million), compared to a loss of £83 million (€96.28 million) a year ago, and free cash flow of £3.2 million (€3.71 million), up from a negative cash flow of £27.7 million (€32.13 million).
The company said that it reported growth across key metrics, including a 6% increase in gross transaction value (GTV) and a 2% rise in revenue at constant currency, with orders returning to growth of 2%. This was achieved alongside a stable gross profit margin.
There was also notable GTV growth in both its UK & Ireland and International markets, with constant currency GTV growth of 7% in UK & Ireland and 5% in International.
'Effective Execution'
“I am pleased with the performance we have achieved this half, which was driven by effective execution of our growth and profitability initiatives," commented Will Shu, chief executive. "As a result, we reached two major financial milestones: positive free cash flow and positive profit for the period.
"Looking ahead, while there is continued uncertainty in the external environment, I am encouraged by the inflection we are currently seeing in consumer behaviour in many of our markets. The Deliveroo platform is more powerful than ever, and we remain responsive to the external environment while continuing to optimise our proposition for consumers, riders and merchants."
Analyst Viewpoint
Commenting on Deliveroo's performance, Russ Mould, analyst with AJ Bell, said, “Food takeaway platform Deliveroo served up a significant milestone with its results for the first six months of the year as it delivered its first half-year profit since joining the market in 2021. Significantly, this was also backed by positive free cash flow which, unlike profit figures, cannot be massaged to give a more favourable picture of performance.
“The shares have really struggled since early optimism in the wake of its IPO evaporated with concerns ranging from regulation, competition and slowing demand as consumer habits changed coming out of the pandemic.
“The company is now seeing improved demand and has sufficient confidence to announce a material share buyback programme. A change to listing rules, which effectively allow for the sort of dual class share structures which provide Deliveroo founder Will Shu with greater voting rights than ordinary shareholders, might pave the way for the company’s entry into the FTSE 250.”
Additional reporting by ESM
