Deliveroo’s warnings of weak consumer sentiment sent its share price downward this week despite the company posting its first-ever annual profit.
The FTSE 250 company recorded a profit of £2.9m in 2024, compared with a loss of £31.8m the year before.
But its share price fell by as much as 8% this morning due to the group pushing back its earnings target. Deliveroo was previously pursuing an adjusted EBITDA margin of 4% by 2026 but revised this to the “medium term”.
“Deliveroo’s results are like receiving a takeaway order with free prawn crackers but missing the fried rice,” said Russ Mould, investment director at AJ Bell.
“The company reporting its full year of profit along with positive free cashflow is a big milestone, but it is spoilt by a bleak assessment of the outlook.”
The stock recovered some gain throughout the day to close this afternoon down 4.1% to 119.5p.
The total value of orders through Deliveroo rose 6% to £7.4bn in 2024, giving it revenues of £2.1bn.
Sean Kealy, an analyst at Panmure Liberum, said the company’s change in guidance “surprised the market to the downside”, but he highlighted grocery as a silver lining.
Deliveroo’s grocery business, which it launched in 2018, accounted for 16% of sales in the second half of the year, up from 13% in the same period of 2023.
Co-founder and CEO Will Shu said grocery could eventually overtake restaurant orders at the group. “I don’t see why it wouldn’t be bigger than our core restaurant business over time,” he said. “There is a broader societal shift in on-demand, which is the impetus behind a lot of this stuff.”
Deliveroo has also added retailers like Ann Summers and Screwfix to its range as it looks to expand just food.
Yet there are doubts over the scale of grocery’s potential contribution. “Moving into groceries may help at the margin but it is unlikely to be enough to mitigate a major decline in takeaway volumes,” said Mould.
Earlier this week, Deliveroo announced it was exiting its loss-making Hong Kong operations after nine years trading in the market.
In February, media reports claimed Shu could leave Deliveroo later this year. Shu said this week that he was “100% committed to what we’re doing here”.
And he told The Grocer in a call earlier today that he was going nowhere.
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