Just Eat Takeaway Sheds More Light on Free Cash Flow Bridge; 2023 Profit Guide Looks Conservative

Just Eat Takeaway reported fiscal 2022 results with total orders down 9%, and gross transaction value, or GTV, flat (down 5% at constant currency) broadly in line with our estimates as we reported back in January when the company released its fourth-quarter trading update. Regionally, Southern Europe, Australia, and New Zealand was the main detractor with orders and GTV down 15% and 8%, respectively, which was partially offset by the rest of the group (Northern Europe GTV up 3%, North America GTV up 1% aided by currency, down 9% at constant currency, U.K. and Ireland down 1%, down 2% at constant currency). Order declines were broadly expected due to tough comparables and a lower number of low-contribution orders, while GTV growth is the product of higher average order values (restaurants passing on inflation and Just Eat reducing the number of low-value orders) as well as positive currency effects. On guidance, management reiterated its outlook for fiscal 2023 (no specific GTV or order growth guidance was given, but management said growth should be skewed toward the end of the year given soft comps from last year) with adjusted EBITDA expected to be about EUR 225 million, a number that includes "investments in food and nonfood adjacencies and wage costs inflation, and takes into account the uncertain macroeconomic environment." Regarding top-line growth, on the call, management said that it feels comfortable with consensus (FactSet consensus points to about 5% revenue growth in fiscal 2023). Although we do expect to adjust our 2023 top-line growth (revenue growth to 5% versus 15% in our model) and EBITDA (to EUR 225 million versus EUR 3 million in our model) estimates, we don't expect to materially change our EUR 81 fair value estimate as our midterm and long-term value drivers remain intact. Shares trade deep in the 5-star territory.