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Earnings

Deliveroo delivers a cautious outlook

Deliveroo share price: A Deliveroo delivery cyclist

After the woes of the last few days, Deliveroo's shareholders are hoping for some good news this morning, after sharp falls in Deliveroo's share price since the shares were listed at the end of March.

Deliveroo share price pulls up from record low

Earlier this week we hit a record low of 242p before rebounding, helped by a positive update from sector peer Just Eat Takeaway earlier this week, who posted some very strong numbers.

Deliveroo's share price closed up at 270.20p yesterday, but has slipped back in early trade so far this morning, following the release of the company's Q1 results.

Positive Q1 update

This morning’s Q1 update from Deliveroo showed that group orders rose 114% year-on-year to 71m, with monthly active users rising to 7.1m, a rise of 91%. In terms of the numbers, gross transaction value (GTV) rose to £1.65bn, a rise of 130% over the same quarter a year ago, and an increase of 23% on Q4.

On the commercial front, Deliveroo serves over 117,000 restaurants, while it also works with a number of major retailers including Aldi, Waitrose, Sainsbury’s and Morrisons across a number of sites in the UK. Earlier this week the company signed a two-year deal with Sainsbury’s to extend its recent trial to 100 stores from the current 10. These stores are based in London, as well as Glasgow, Aberdeen, Liverpool, Newcastle, York and Leeds. Grocery deliveries represented over 10% of UK and Ireland GTV in Q1.

Guidance unchanged

The company kept its guidance unchanged for full-year annual GTV growth of between 30% to 40%, and a gross profit margin of 7.5% to 8%, though the guidance came with a warning that growth might slow as lockdown restrictions are eased.

This will be a concern across the sector, which makes it doubly important that Deliveroo is able to expand in other areas of its business model, where it has an advantage. Its logistics model means it has a head start on the likes of Just Eat Takeaway, who are already making inroads having signed deals with Leon, Chipotle, Starbucks and Costa.

Today’s update is certainly encouraging, and shows the business is heading in the right direction. It remains to be seen whether it will be enough to tempt shareholders back on board after the losses in Deliveroo's share price since the beginning of the month.