Deliveroo Plc Class A ((GB:ROO)) has held its Q4 earnings call. Read on for the main highlights of the call.
Deliveroo’s recent earnings call painted a picture of robust financial health and strategic achievements, underscored by the company’s first statutory profit and positive cash flow. While the call was largely optimistic, it did not shy away from addressing challenges such as the exit from the Hong Kong market and potential economic uncertainties in Europe. Nevertheless, Deliveroo remains upbeat about its growth trajectory and market prospects.
Record GTV and Adjusted EBITDA Growth
Deliveroo reported a year-on-year Gross Transaction Value (GTV) growth of 6% and an impressive adjusted EBITDA of £130 million, marking a 52% increase from the previous year. This performance underscores the company’s strong financial management and effective cost control strategies.
First Full Year of Statutory Profit and Positive Free Cash Flow
In a significant milestone, Deliveroo achieved a full year of statutory profit and positive free cash flow for the first time. This achievement is a testament to the company’s financial resilience and strategic planning.
Improvements in Customer Engagement
The company noted a return to growth in orders in 2024, with improving retention and frequency trends. These positive changes are attributed to enhanced customer value propositions and the expansion of verticals.
Successful Expansion of Grocery and Retail Segments
Deliveroo’s grocery segment now accounts for 16% of the Group’s GTV in the second half of 2024, driven by strong double-digit growth. The retail segment also experienced significant growth in partnerships and product offerings.
Significant Progress in Delivery Efficiencies
The company achieved a reduction in the cost of sales by 90 basis points year-on-year, thanks to delivery efficiencies, including a 50% increase in stacked orders.
Exit from Hong Kong Market
Deliveroo’s decision to exit the Hong Kong market was driven by challenges such as a highly price-sensitive user base and demographic shifts, which affected overall growth.
Uncertainty in European Markets
The company is facing macroeconomic volatility and geopolitical uncertainty in Europe, which may impact its future growth projections.
Potential Impact of National Living Wage and National Insurance Increases
Deliveroo anticipates that upcoming increases in the National Living Wage and National Insurance in the UK could affect consumer prices and demand.
Forward-Looking Guidance
Looking ahead, Deliveroo is optimistic about 2025, projecting high single-digit percentage GTV growth in constant currency, excluding Hong Kong. The company expects adjusted EBITDA to be between £170 million and £190 million. Deliveroo plans to focus on its Customer Value Proposition and verticals to drive consumer engagement, despite challenges in the consumer environment. Strategic investments are planned to capture growth opportunities, particularly in regions where they can establish a competitive edge.
In conclusion, Deliveroo’s earnings call highlighted a company that is not only achieving financial milestones but is also strategically positioned for future growth. While challenges remain, particularly in Europe and with regulatory changes in the UK, Deliveroo’s strong financial performance and strategic initiatives provide a solid foundation for continued success.