Deliveroo: Gross Transaction Value Ahead, Driven by International Business; Guidance Maintained

Deliveroo released its first-quarter trading update, which included gross transaction value up 6% in constant currency (5% in reported currency), slightly above company-compiled consensus of 4% in reported currency. Order growth returned to positive territory at 2% for the group, driven by the international segment (up 4%), with UK and Ireland flat. This compares with 7% GTV growth and 1% order growth for Just Eat Takeaway in UK and Ireland in the first quarter, implying incremental market share losses for Deliveroo in the period. In international, GTV growth was 6%, a strong sequential improvement from 1% in the fourth quarter of 2023, with good performance driven by France, United Arab Emirates, and Hong Kong. Revenue growth came in lower than GTV growth, implying decreasing take rates, a function of Deliveroo's investments in the customer value proposition. Management reiterated its guidance for fiscal 2024 GTV growth of 5%-9% (versus 8% in our model), adjusted EBITDA of GBP 110 million-GBP 130 million (versus GBP 120 million in our model), and free cash flow to be positive for 2024 (versus around GBP 60 million in our model).