The founder of Deliveroo moved to reassure shareholders over its ability to move out of the red as he outlined a “longer-term path to profitability”.
Will Shu, 42, chief executive, said that turning a profit was “a key focus for the food delivery group this year and beyond” with a target of breaking even “at some point” during the first half of next year or the first half of 2024.
Aiming for that target was not only important for shareholders but “galvanising to go after” for the group’s employees, he added.
He revealed the target alongside 2021 results that were described as “a mixed bag” by one analyst, with revenues in line with expectations, a below-par gross profit margin and disappointing 2022 guidance.
Shu said the figures showed that the company had continued to make good progress in executing its strategy in its first year as a public company, adding: “I am proud of our performance.”
Shareholders might beg to differ given the performance of the share price since its initial public offering in March last year. Despite gushing support from Rishi Sunak for “a true British tech success story”, the stock slumped by 30 per cent in early trading and has struggled ever since.
The shares, issued at 390p, hit a new low of 101p this month. Yesterday the stock rose 7½p, or 6.4 per cent, to 124p as investors bought into Shu’s long-term target. By 2026 he aims to hit an adjusted earnings margin of at least 4 per cent “with further upside potential beyond”.
Deliveroo, founded in 2013 by Shu and Greg Orlowski, works with 100,000 riders and 117,000 restaurants in 12 countries and is moving into groceries. At the issue price, the company had a market value of £7.6 billion.
In the year to December 31, Deliveroo lifted revenues by 57 per cent to £1.82 billion, but pre-tax losses widened from £213 million to £298 million. The gross transaction value was up 70 per cent to £6.63 billion after a second-half rise of 46 per cent. Underlying losses rose from £11 million to £131 million, not helped by higher marketing spend.
Shu said the “broader geopolitical and economic impacts” of the conflict in Ukraine added to the challenges.
Deliveroo boss confident profit will arrive eventually