Orders over fast-food delivery platform Deliveroo (ROO) accelerated for the fourth consecutive quarter, but the data failed to lift residual gloom from its IPO (initial public offering) pricing flop. On Thursday, the stock fell nearly 2% to 265.4p, staying almost 32% below the 390p when it listed on 31 March.
The company reported a 114% year-on-year jump in group orders to 71 million, while gross transaction value (the amount of money spent) soared 130% to £1.65 billion. Chief Executive Will Shu said demand was strong in both UK and Ireland and its international markets, driven by record new customer growth and sustained demand from existing customers.
Yet the data did little to lift the gloomy mood of investors who must now face questions about the sustainability of Deliveroo’s growth.
UK restaurants and pubs have reopened, albeit outdoors-only for now, but a full reopening (17 May) is just weeks away.
Restaurant reservations on 12 April were 79% of their level on the same day in 2019, before the pandemic, according to figures sourced from reservations company OpenTable, from close to zero previously, the Office for National Statistics said.
Questions are being rightly asked about Deliveroo’s ability to keep lockdown level growth going in the face of a wall of competition with UK consumers desperate to get out for a pint and a bite.
‘This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of Covid-19 restrictions,’ admitted Deliveroo’s Shu. ‘So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance.’
That guidance includes gross transaction value growth of between 30% and 40% and gross profit margins of between 7.5% and 8%.
Deliveroo said it was difficult to know how much of the growth was driven by the lack of opportunity to eat out in cafes and restaurants in Covid-19 lockdowns, adding that it expected the rate of growth to slow as restrictions eased.
This is not the mood music investors will have wanted to hear.