Deliveroo plc Class A (ROO) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Deliveroo plc Class A disclosed 12 risk factors in its most recent earnings report. Deliveroo plc Class A reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2021

Risk Distribution

33% Finance & Corporate

25% Production

17% Ability to Sell

8% Tech & Innovation

8% Legal & Regulatory

8% Macro & Political

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Deliveroo plc Class A Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2021

Main Risk Category

Finance & Corporate

With 4 Risks

Finance & Corporate

With 4 Risks

Number of Disclosed Risks

S&P 500 Average: 31

Recent Changes

0Risks added

0Risks removed

0Risks changed

Since Mar 2022

0Risks added

0Risks removed

0Risks changed

Since Mar 2022

Number of Risk Changed

S&P 500 Average: 1

See the risk highlights of Deliveroo plc Class A in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 12

Finance & Corporate

Total Risks: 4/12 (33%)Above Sector Average

Share Price & Shareholder Rights1 | 8.3%

Share Price & Shareholder Rights - Risk 1

Three-sided marketplace

Our business model relies on a three-sided marketplace, and to achieve profitability, we must continue to acquire and retain consumers and restaurant and grocery partners, and maintain a balance between supply and demand for riders, as well as growing AOV* and/or order frequency to develop our business, which may be difficult to maintain. Primary impact type Strategic Link to strategy Invest in differentiated value propositions Risk appetite High. We are continuously focused on the enhancement of the value proposition for consumers, riders and restaurant and grocery partners. No Change – This is a core element of our strategy and business model and we consider that we have continued to enhance our value proposition for all sides of our marketplace. We have seen strong consumer, rider, and restaurant and grocery partner acquisition and retention throughout 2021, but as we continue to grow, this will remain a principal risk, particularly considering macro factors such as inflation in our markets more generally.

Accounting & Financial Operations1 | 8.3%

Accounting & Financial Operations - Risk 1

Financial condition

We have in past periods incurred, and may in future periods incur, net losses, which could affect our need and ability to access additional capital to grow our business. Primary impact type Strategic Link to strategy Strengthen levers of profitability Risk appetite Medium. Our spend controls ensure that costs are monitored against the budget. Reduced – Following the successful completion of fundraising activities in H1 2021, Deliveroo has a strong financial position.

Corporate Activity and Growth2 | 16.7%

Corporate Activity and Growth - Risk 1

Managing growth

We are a rapidly growing company and if we do not manage our growth and evolution successfully, or we fail to execute on our strategy, our business will suffer. Primary impact type Strategic Link to strategy Drive sustainable growth Risk appetite High. Formal strategic planning and budgeting cycles are operated quarterly, half-yearly and annually. Our spend controls ensure that costs are monitored against the budget. We are evolving our regulatory and compliance infrastructure to support our growth requirements. No Change – We continue to carefully manage investments made in the pursuit of long term value.

Corporate Activity and Growth - Risk 2

Key commercial relationships

We rely on various national and global brands in each of the markets in which we operate, sometimes on an exclusive basis. The loss of such relationships or the inability to enter into new relationships (on commercially attractive terms or at all) could adversely affect our business. Primary impact type Strategic Link to strategy Invest in differentiated value propositions Drive sustainable growth Risk appetite Medium. Our commercial teams in each of our markets develop strong working relationships with our partners to foster mutual success. No Change – We have continued to add new significant national and global brand accounts to the platform across both restaurant and grocery partners. Notwithstanding normal account churn, the risk to growth of losing any of these brands remains static.

Production

Total Risks: 3/12 (25%)Above Sector Average

Manufacturing1 | 8.3%

Manufacturing - Risk 1

Service availability

We depend on our network infrastructure, software, content delivery processes, and associated key third-party services and software to operate our platform and to receive process and fulfil orders. Any significant disruption in service, including from a distributed denial of service attack, could materially impact our operations, reputation and financial performance. Primary impact type Operational Link to strategy Strengthen levers of profitability Risk appetite Low. The Tech team operates in accordance with our Change Control Standard, which requires formal planning, as well as appropriate review and approval for all changes. Should an incident arise, the Engineering team utilises a formalised Incident Management Framework, alongside an ‘on-call’ rota, ensuring that incidents are resolved in a timely manner, while maintaining channels of communication with consumers, riders, and restaurant and grocery partners. No Change – As a technology business that executes continuous development, relying upon bespoke systems for our operations, this continues to be a principal risk, but one we are acutely aware of and continuously monitoring.

Employment / Personnel2 | 16.7%

Employment / Personnel - Risk 1

Rider model and rider status

Our business would be adversely affected if our rider model or approach to rider status and our operating practices were successfully challenged or if changes in law required us to reclassify our riders as employees including with retrospective effect. Primary impact type Compliance Link to strategy Invest in differentiated value propositions Drive sustainable growth Risk appetite Low. Policy and employment legal teams continuously focus on ensuring our rider model is compliant with local laws and regulations and are actively defending any challenges to our rider model. We proactively engage with government bodies to discuss proposals or consultations. No Change – Our rider model continues to be a principal risk for the Group. The level of risk differs by market depending upon specific local circumstances, including legislative changes, but the overall profile of this risk is unchanged. In assessing this we considered the European Commission’s proposal for a Directive on improving working conditions in platform work, our exit from Spain, and the positive outcome from the Court of Appeal in the UK and judgements in our other markets which have confirmed riders’ self-employed status.

Employment / Personnel - Risk 2

Attracting and retaining key personnel

We rely on the skills and experience of our key personnel, and our business may be adversely affected if we cannot attract and retain the talent required to solve the complex problems presented by our three-sided marketplace. Primary impact type Operational Link to strategy Invest in differentiated value propositions Risk appetite Low. We strive to provide, and continuously enhance, an attractive value proposition for employees, including through the creation of an inclusive environment where our people can grow fast and leave their mark. Increased – A key component of our growth strategy is to innovate and invest to create the most efficient logistics network for our platform and to generate tech-driven efficiencies across our marketplace and in our operations. To achieve this it is critical that we attract and retain the best, highly skilled engineering and technology talent. Although we have successfully attracted key hires, including at a senior level during the year, we compete for this specialist technology talent in a highly competitive global marketplace where levels of variable pay can be significantly higher. As a result it can be a challenge to attract and retain such personnel.'

Ability to Sell

Total Risks: 2/12 (17%)Above Sector Average

Competition1 | 8.3%

Competition - Risk 1

Competition

We operate in a highly competitive industry and must compete effectively to succeed. We may not be able to achieve or maintain a position in each of our markets that is sufficient to support the business sustainably for the long term. Primary impact type Strategic Link to strategy Drive sustainable growth Risk appetite High. We plan and execute strategic initiatives targeted at achieving or maintaining a #1 or strong #2 market position, including through the continuous enhancement of the value proposition for consumers, riders, and restaurant and grocery partners. No Change – Although there has been market consolidation and continued growth of rapid grocery partners, the landscape remains as competitive as previous years.

Brand / Reputation1 | 8.3%

Brand / Reputation - Risk 1

Reputation and brand

Our reputation, brand and ability to build and retain trust with new and existing stakeholders (including shareholders), may be adversely affected, including by unfavourable or inaccurate publicity or events beyond our control (including the misconduct by our employees, partners or riders). This could negatively impact our future performance and prospects. Primary impact type Reputational Link to strategy Drive sustainable growth Risk appetite Low. We ensure that we carefully vet our prospective partners and riders. We proactively contact our consumers, riders and partners when something goes wrong. No Change – As a marketplace platform this is an inherent risk.

Tech & Innovation

Total Risks: 1/12 (8%)Above Sector Average

Cyber Security1 | 8.3%

Cyber Security - Risk 1

Cyber and data security

We are responsible for protecting all personal data we receive from consumers, riders, partners and employees. For the sensitive data we hold and process, we could face significant reputational and legal consequences as well as financial loss if we fail to protect this information from security threats, including Ransomware. Primary impact type Compliance Link to strategy Drive sustainable growth Risk appetite Low. We operate robust application and infrastructure security controls designed to prevent, identify and respond to information security threats. Increased – IPO, continued growth, new product offerings with physical locations and access to systems, continuously evolving security landscape.

Legal & Regulatory

Total Risks: 1/12 (8%)Above Sector Average

Regulation1 | 8.3%

Regulation - Risk 1

Compliance with other laws and regulations

We are subject to the laws and regulations of numerous national and local authorities and changes to, or uncertainty regarding, the applicable laws, regulations or regulatory environment may adversely affect our business. Primary impact type Compliance Link to strategy Drive sustainable growth Risk appetite Low. Our Policy, Public Affairs, Tax, Information Security, and Legal teams ‘horizon scan’, flagging any potential emerging risks they become aware of before they impact the business, working collaboratively with relevant teams to plan mitigating actions as appropriate. We proactively engage with government bodies to discuss proposals or consultations. No Change – No other significant changes in the period that adversely affect our business.

Macro & Political

Total Risks: 1/12 (8%)Above Sector Average

Natural and Human Disruptions1 | 8.3%

Natural and Human Disruptions - Risk 1

External environment and events

Our business could be affected by the actions of governments, political events or instability, or changes in public policy in the countries in which we operate. Adverse economic conditions could impact consumers’ discretionary spending, and in turn, our growth and profitability. Primary impact type Strategic Link to strategy Drive sustainable growth Strengthen levers of profitability Risk appetite Medium. We are continuously focused on the enhancement of the value proposition for consumers, including enabling access to a broad selection aligned to a hyperlocal market. Increased – Continued economic pressure, including inflation, could impact consumers’ discretionary spending, and in turn, our growth and profitability.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.