Deliveroo Gives Update on Q2 Trading; Cuts 2022 Guidance In Line With Our Estimates

Deliveroo provided a trading update for the second quarter (gross transaction value up 2% and orders up 3%) against a difficult comparative basis (coronavirus lockdown restrictions in second-quarter 2021). GTV per order was somewhat lower year over year due in part to increased basket sizes during lockdowns. Management attributed the decrease in orders and GTV to "increasing consumer headwinds" throughout the quarter. As a result, the company cuts its fiscal 2022 guidance on GTV growth to 4%-12% from 15%-25% (versus 13% in our model) at constant currency while maintaining EBITDA margins (negative 1.5% to negative 1.8% of GTV or about a GBP 120 million loss at the midpoint versus GBP 122.9 million in our model). Given roughly in-line bottom-line guidance, we don't expect to change our GBX 215 fair value estimate and no moat rating for Deliveroo. We recently released an update of our food delivery estimates given a weaker consumer spending outlook across the food delivery markets we follow. Deliveroo's 4% GTV growth in the U.K. compares with our forecasts for a 4% GTV decline for Just Eat Takeaway in the region.