Deliveroo Reaches First Ever Profit in Major Milestone
Food delivery platform Deliveroo has achieved its first ever profit, earning £1.3m in the first half of 2024. This is a sharp turnaround from the £82.9m loss it reported during the same period last year. The company also saw a 2% increase in total orders, reaching 147 million.
In its financial results published on Thursday, Deliveroo announced a cash flow of £3m and a £150m share buyback program. The average cost of a customer’s basket, including delivery fees, also increased to £25, up 80p from the previous year. This growth can be attributed to an increase in prices from restaurants and shops, as well as the company’s expansion into grocery and retail deliveries.
Founder and CEO Will Shu called the results a “major financial milestone” and emphasized the importance of consumer trust in unlocking further growth in the industry. He stated, “We are relentlessly focused on achieving a flawless delivery experience, along with ensuring fair pricing for our consumers.”
Deliveroo’s focus on retail delivery has also shown promising results, with strong growth in grocery deliveries and an increasing number of shoppers using the platform for mid-sized baskets ranging from £30 to £60.
The company has faced criticism and protests in the past regarding pay for delivery workers, who are classified as self-employed. However, Deliveroo recently struck a deal with the GMB union, increasing the guaranteed minimum pay for riders to £12 an hour, plus vehicle costs for all vehicle types.
Julie Palmer, a partner at restructuring firm Begbies Traynor, described the results as “remarkably healthy.” She noted that Deliveroo’s success is particularly impressive amidst weaker consumer demand and lower discretionary spending for many retailers.
Investment platform AJ Bell’s Russ Mould also highlighted the significance of this milestone for Deliveroo since its stock market floatation in 2021. He added, “Significantly, this was also backed by positive free cash flow which, unlike profit figures, cannot be massaged to give a more favorable picture of performance.”
Deliveroo’s shares rose by over 10% on Thursday following the release of its results. This follows a similar trend from rival delivery company Just Eat, which reported a 9% increase in sales by gross transaction value (GTV) despite flat order numbers in the first half of the year.
It is clear that Deliveroo’s strategic focus on expanding beyond takeaway food has paid off, and the company is well-positioned for further growth as the macroeconomic backdrop improves and consumer spending increases.
