(Bloomberg) -- Deliveroo Holdings Plc (LON:ROO) reported earnings that beat analysts’ estimates after the company said it would tighten its marketing budget and cut costs.
Adjusted earnings before interest, taxes, depreciation and amortization was a loss of £68 million ($82.1 million) in the first half of the year, the company said in a statement on Wednesday. That compared to the average analyst estimate for a loss of £73.3 million, according to a Bloomberg survey.
In July, the London-based food delivery company had slashed its projections for sales growth this year. Delivery companies across the industry have been facing worse-than-expected slowdowns in order growth with higher energy bills and inflation eating away at customers’ incomes.
“We have made good progress delivering on our profitability plan, despite increased consumer headwinds and slowing growth during the period,” Chief Executive Officer Will Shu said in the statement. “Underpinning our progress is a rigorous approach to capital allocation, ensuring that we invest behind the opportunities with the highest returns.”
Key Insights
- Revenue rose to £1.01 billion in the period. That compares to the £985 million forecast by analysts in a Bloomberg survey.
- The company reiterated its guidance for 4% to 12% gross transaction value growth for the year. That was down from a previous forecast of 15% to 25%.
- Deliveroo has stepped up efforts to generating more cash, rolling out an advertising platform and outlining plans to reach break-even status in the next couple of years.
- The company said it had discontinued its operation in Spain, announcing last year that the level of investment required to maintain a top competitive position was too great.
- Rival Just Eat Takeaway.com NV wrote down the value of its US-based Grubhub business by 3 billion euros ($3.1 billion), reported that orders slowed in the first half of the year, and said it would cut jobs in France.
Market Reaction
- The company fell 3.6% to 91.24 pence in London trading on Tuesday. The stock had declined 56% this year.
- Deliveroo sold shares in an initial public offering in March of last year at 390 pence apiece.
- Rivals including Just Eat and Delivery Hero SE have also seen shares decline this year, 65% and 52% respectively.
Get More
- After $30 Billion Rout, Food Delivery Firms Face Growth Slowdown
- Deliveroo Slashes Forecast After Consumers Cut Back Orders
- Just Eat Takeaway Records 3 Billion-Euro Hit on Grubhub
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