Morningstar

Deliveroo: Steady Top-Line Growth Despite Headwinds While 2023 Guidance Confirmed

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Securities In This Article
Deliveroo PLC
(ROO)

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.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Ioannis Pontikis, CFA

Director of Equity Research in Europe
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Ioannis Pontikis, CFA, is a Director of Equity Research in Europe for Morningstar*. He covers European grocers and global food and beverage companies like Tesco, Unilever, Nestle, and Danone, and manages a team of eight analysts across the Financials and Consumer sectors. He also leads Morningstar’s Equity Research Valuation Committee, advancing the firm's valuation methodology through projects such as developing new methodologies, refining our valuation model, and enhancing the efficacy of our ratings.

Before joining Morningstar in 2017, Pontikis spent six years on the buy-side, co-managing a $100M long/short equity fund and leading teams in applying machine learning to stock and equity factor selection models. He developed the fund's valuation and risk assessment framework, achieving strong risk-adjusted performance. Prior to this, Pontikis worked at Nestle S.A. in Athens, focusing on financial reporting, budgeting, and auditing proposals to improve processes.

Pontikis research has appeared in numerous media outlets including Bloomberg, CNBC, Reuters, Guardian, Frankfurter Allgemeine Zeitung among others.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus’s and a master’s degree in accounting and finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation and studying towards an advanced post-masters degree in portfolio and risk management.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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