Deliveroo: Steady Top-Line Growth Despite Headwinds While 2023 Guidance Confirmed
Deliveroo ROO reported a 2023 first-quarter trading update with gross transaction value and orders down 1% and 9% respectively. Within this, the U.K. and Ireland fared particularly well, especially compared with competitors with GTV growth at 6% and orders down 3% versus Just Eat Takeaway’s GTV down 6% and orders down 11% in the same period and market, implying market share gains. Zooming in on the main drivers behind the significant top-line growth slowdown, this seems to be customer churn, with the average monthly order frequency remaining stable (3.4). Average monthly active consumers were lower on a sequential basis in its U.K. and international segments (from 4.1 million to 4.0 million and from 3.3 million to 3.1 million respectively).
Deliveroo confirmed guidance for 2023, with the company expecting low- to mid-single-digit growth in GTV (with growth improving through the year) and adjusted EBITDA to further improve in the range of GBP 20 million-GBP 50 million, weighted to the second half of the year. Bottom-line and top-line growth guidance are in line with company-compiled consensus of about GBP 47 million and 4% respectively for 2023. We do not expect to materially change our GBX 215 fair value estimate. Shares trade deep in 5-star territory.
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