Deliveroo today reported its first ever profit in a major milestone for the London-based business three years after its troubled IPO.
The firm’s interim results showed a small profit of £1.3 million for the first six months of 2024, turning round a first-half loss of £82.9 million for the previous year, as well as its first period of cash flow positivity.
That means the delivery app has seen its first twelve-month period of profitability after its net income hit £46.7 million in the second half of last year.
Co-founder and CEO Will Shu told the Standard: “We hit two very important concurrent milestones [and] for the company we view this as a bit of an inflection point.
“Usually I don’t talk about financial metrics or outputs as a point of discussion but I think in this case it is important.
“We’ve seen that we can improve profitability as we’re growing,” Shu said, adding: “We see less headwinds in the consumer markets.”
Deliveroo shares jumped 8.5% to 138p after markets opened, though the shares remain around half their IPO value.
Deliveroo said it had seen a 2% rise in orders compared to last year, as well as a 6% rise in gross transaction value (GTV), a measure of the total value of orders.
The Cannon Street-based business appears to have outperformed its biggest European rival Just Eat Takeaway, which last week posted a 1% fall in GTV and said it would be withdrawing operations in France and New Zealand.
But Shu indicated Deliveroo had no plans to withdraw from any of the countries it operates in, adding: “We’re happy with the markets we’re in.”
The company said it expected to be free cash flow positive for the rest of the year, upgrading its full-year earnings to the top half of the previously guided range of £110-130 million, as it announced a £150 million share buyback.
AJ Bell investment director Russ Mould said: “The shares have really struggled since early optimism in the wake of its IPO evaporated with concerns ranging from regulation, competition and slowing demand as consumer habits changed coming out of the pandemic.
“[But] the company is now seeing improved demand and has sufficient confidence to announce a material share buyback programme. A change to listing rules, which effectively allow for the sort of dual class share structures which provide Deliveroo founder Will Shu with greater voting rights than ordinary shareholders, might pave the way for the company’s entry into the FTSE 250.”
Deliveroo last year ended a protracted legal battle over its employment practices, after campaigners’ efforts to get riders treated as workers were blocked by the Supreme Court.
But the new Labour government has indicated a major overhaul in employment law, including changes to zero hours contracts and protections for gig economy workers.
Shu said he “did not anticipate” any impact to Deliveroo’s operations by the legislation.
“Labour’s position as we understand it is that they do support genuine self-employment,” he said.
“Our riders are genuinely self-employed and we also offer protections.”
