Deliveroo Share Price Spiked Higher, Then Fell on FY 2023 Results

The Deliveroo PLC (LON: ROO) share price spiked higher, then fell after the online food delivery company released its preliminary full-year results for the year ended 31 December 2023. Despite the macroeconomic environment, the company reported a 13% increase in gross profit, with revenue and Gross Transaction Value (GTV) climbing by 3%, showing a promising sign of resilience. 

Notably, the growth accelerated in the latter half of the year, with GTV rising by 5% compared to the same period last year and order numbers stabilising in the final quarter. The company made significant strides in profitability, with adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) reaching £85 million, a stark contrast to the previous year's £45 million loss.

This improvement was attributed to several factors, including more efficient delivery operations, optimized marketing expenditure, reduced overhead costs, and a surge in advertising revenue. Moreover, the company decreased its losses to £32 million, down by £262 million.

The company reduced its free cash outflow to £38 million from a previous £243 million, considering exceptional cash items and excluding interest income. With a net cash position of £679 million, down from £1,000 million, it returned approximately £309 million to shareholders, equating to about 30% of its net cash at the year's start.

Commitment to customer satisfaction remained a priority, with ongoing investments to enhance the consumer value proposition. This involved broadening the selection of offerings, improving the in-app experience, introducing premium delivery options, facilitating top-up grocery orders, and launching a retail proposition. 

These initiatives led to tangible benefits, including higher customer satisfaction, reduced restaurant mark-ups on the platform, and improved service metrics. The grocery segment, in particular, showed strong growth, achieving an annualised GTV of £1.0 billion in the last quarter, driven by mid-sized basket orders.

At a recent Capital Markets Event, the company also outlined its strategic priorities and growth targets. These include expanding the consumer value proposition, venturing into new markets, and enhancing delivery experiences. Moreover, it aims to bolster profitability and cash flow by optimising rider wait times, improving order efficiency, and leveraging automation for better operational efficiency.

The company targets a mid-teens percentage growth in GTV in constant currency over the medium term, with an adjusted EBITDA margin goal of over 4% by 2026. Looking ahead to 2024, the company anticipates GTV growth to be between 5% and 9% in constant currency terms.

Adjusted EBITDA is projected to be between £ 110 and 130 million, and the company aims for positive free cash flow throughout the year.

Deliveroo share price. 

The Deliveroo share price spiked higher, then fell 3.49% to a low of 110.7p from Wednesday’s closing price of 114.7p.