Morningstar

Deliveroo’s 2022 In Line, Guidance Light on Top-Line Growth; Shares Attractive

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Securities In This Article
Deliveroo PLC
(ROO)

Following its fourth-quarter trading update in January, no-moat Deliveroo ROO reported 2022 results with an adjusted EBITDA loss of GBP 45 million for the year (negative 0.7% of gross transaction value, or GTV, excluding recent market exits of Australia and the Netherlands) and GBP 6.6 million in the second half, in line with previous guidance. As a reminder, GTV for the year was up 9% (up 6% at constant currency) and orders down 2% (versus Just Eat Takeaway’s GTV down 2% and orders down 12% in the same period). GTV and orders in its core U.K. and Ireland market were robust, up 9% and flat, respectively, implying market share gains (versus Just Eat’s GTV down 3% and orders down 10% in the U.K. and Ireland) with more monthly active consumers on a sequential basis in the U.K. to 4.1 million from 3.9 million, and flat year on year mainly due to seasonality.

More importantly, Deliveroo provided guidance for 2023, with the company expecting low- to mid-single-digit growth in GTV (with growth improving through the year and broadly flat in the first quarter) and adjusted EBITDA to further improve in the range of GBP 20 million-GBP 50 million, weighted to the second half of the year. Although bottom-line guidance is in line with company-compiled consensus of about GBP 35 million for the year, top-line guidance came slightly short of our and consensus’ expectations (low to midsingle digits versus 6% for consensus). 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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