No Surprises in Deliveroo's Q1 Results and Fiscal 2022 Guidance; Shares Cheap

Deliveroo reported its first-quarter trading update (gross transaction value, or GTV, up 12% and orders up 18%) versus a tough comparison base (coronavirus lockdown restrictions in first-quarter 2021). GTV per order was up 1% sequentially (versus fourth-quarter 2021) but down 6% year on year primarily driven by the U.K. and Ireland segment (down 7% year or year) and the result of elevated basket sizes during lockdowns. Average monthly active consumers continue to increase albeit at a lower rate (16% in the first quarter versus 37% in fourth-quarter 2021, flat in the U.K. and Ireland sequentially), while the average monthly order frequency remained flat at 3.4 per month. Deliveroo expanded the Plus partnership with Amazon Prime to include France and Italy. The company confirmed guidance of fiscal 2022 GTV growth (15% to 25%) and EBITDA margins (negative 1.5% to negative 1.8% of GTV or about a GBP 133 million loss at the midpoint), which are in line with our estimates (20% GTV growth and negative 1.8% EBITDA margin or a GBP 137 million loss in our model). We don't expect to materially change our GBX 350 fair value estimate and no moat rating for Deliveroo.