Deliveroo, based in the United Kingdom, announced a path to profitability on Thursday, stating that it would break even in about two years as the proportion of revenue spent on marketing in the competitive food delivery sector decreases.
The company, which competes with Just Eat Takeaway.com and Uber Eats, remained cautious about the short-term outlook, forecasting a slowdown in growth as the economic environment for consumers and its restaurant partners worsens.
The company forecasted a 15% -25% increase in the value of gross transactions on its platform this year, down from 70% in 2021 when lockdowns boosted its first half.
“When we look at the three sides of our marketplace — riders, merchants, and consumers — we do see some headwinds, mostly from inflationary pressures,” CEO Will Shu told Reuters.
“We are providing cautious guidance for 2022, but we are extremely optimistic about the future.”
Deliveroo reported a 57 percent increase in revenue to £1.82 billion on £6.6 billion in orders, but its adjusted core loss increased to £131.4 million from £10.8 million due to technology investments and increased marketing spend to drive awareness and acquire new customers.
Deliveroo, which is expanding its grocery delivery service and restaurant business, stated that it aimed to achieve adjusted core earnings break-even in the second half of 2023 or the first half of 2024, and a positive margin of 4% by 2026.
Deliveroo shares, which have lost more than two-thirds of their value since listing at 390 pence in March 2021, were up 8% at 126 pence.
Bernstein analysts said that while guidance for this year was potentially disappointing, longer-term guidance and disclosure were positive.
