Delivery Hero ((DE:DHER)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Delivery Hero presented a mixed sentiment, reflecting both optimism and caution. The company reported significant growth in Gross Merchandise Value (GMV) and revenue, alongside improvements in EBITDA and cash flow. However, these positive developments were tempered by challenges such as foreign exchange (FX) headwinds affecting guidance, legal issues in Spain, and increased costs from the expansion of their own delivery services.
Strong GMV and Revenue Growth
Delivery Hero showcased impressive growth in the second quarter, with GMV increasing by 11% year-over-year on a like-for-like basis. Revenue growth was even more robust, accelerating to 27% during the same period, highlighting the company’s strong market position and customer demand.
Significant EBITDA Improvement
The company reported a remarkable 71% increase in adjusted EBITDA for the first half of the year, reaching EUR 411 million. This improvement represents a margin expansion of 70 basis points, indicating enhanced operational efficiency and profitability.
Strong Cash Position
Delivery Hero maintains a solid financial footing with EUR 2.8 billion in cash at the end of the first half, despite repurchasing nearly EUR 900 million in convertible bonds. This robust capital position provides the company with flexibility to navigate future challenges.
Successful Integration and Platform Expansion
The integration of Glovo has been successfully completed, marking a significant milestone for Delivery Hero. The company now sees half of its GMV coming from multi-vertical customers, who spend 5.2 times more than single vertical customers, demonstrating the effectiveness of their platform expansion.
Strong Performance in MENA and Americas
The MENA region showed impressive GMV growth of 26% year-over-year, while the Americas segment exhibited a 30% increase in GMV and significant EBITDA improvement, underscoring the company’s strong performance in these key markets.
FX Headwinds Impact Guidance
Delivery Hero revised its adjusted EBITDA guidance to EUR 900 million to EUR 940 million due to stronger-than-expected currency headwinds, particularly from the U.S. dollar and Korean won. This adjustment reflects the challenges posed by volatile currency markets.
Legal and Compliance Challenges
The company is facing significant legal and compliance challenges, with EUR 450 million in payment demands from Spanish authorities and EUR 329 million from antitrust settlements. These issues are impacting the company’s cash flow and require careful management.
Cost Pressures from Own Delivery Rollout
The accelerated rollout of own delivery services in Korea and Turkey has led to increased costs, affecting short-term profitability. This strategic expansion is essential for long-term growth but poses immediate financial pressures.
Forward-Looking Guidance
Looking ahead, Delivery Hero remains optimistic despite the challenges. The company expects to reach the higher end of their GMV growth guidance of 8% to 10% for the full year. They have also achieved significant improvements in free cash flow, approaching breakeven, and maintain a robust liquidity position. The successful integration efforts and operational efficiencies, such as improved conversion rates and reduced cost per order, are expected to support continued growth.
In summary, Delivery Hero’s earnings call reflected a balanced view of strong growth and operational improvements, tempered by external challenges and strategic investments. The company’s ability to navigate FX headwinds, legal issues, and cost pressures while maintaining a strong cash position and growth trajectory will be crucial in the coming quarters.