Deliveroo cuts 2022 forecast after sales slow in latest quarter

DELIVEROO slashed its projections for sales growth this year after the value of transactions on its platform grew more slowly in the latest quarter, reflecting an increasingly cautious view of economic performance and mounting challenges facing consumers.

The London-based food delivery company said that gross transaction value (GTV) was projected to rise 4 per cent to 12 per cent this year, after previously forecasting growth of 15 per cent to 25 per cent, according to a statement on Monday (Jul 18). That reduction comes after GTV rose 2 per cent year on year in the second quarter in constant currency, a slowdown compared to a 12 per cent expansion in the first quarter.

Shares in Deliveroo have plunged nearly 60 per cent this year as investors turn to favour profit-generating businesses rather than fast-growing and money-losing technology companies. Deliveroo has stepped up efforts to move toward generating cash, rolling out an advertising platform and outlining plans to reach break-even status in the next couple of years. 

The company also said in its trading update that it generated £3.56 billion (S$5.9 billion) in GTV during the first half of the year, a 7 per cent increase year on year. Guidance for the margin of adjusted earnings before interest, taxes, depreciation and amortisation was maintained and the company said its balance sheet remains strong. 

“Management is confident in the company’s ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control,” according to the statement. 

Full results for the first half of the year will be released on Aug 10. BLOOMBERG