The company wants to break even in the third quarter, at least in its core business.
(Photo: Max Threlfall/ Delivery Hero)
Dusseldorf The delivery service Delivery Hero has presented surprisingly positive figures for the second quarter. According to preliminary figures, the company was able to significantly increase sales despite the poor consumer mood.
The decisive factor, however, was the improvement in the profit margin compared to the gross value of goods, i.e. the entire turnover made via the platform. In the first half of the year, it improved by 0.4 percentage points to minus 1.6 percent. The consensus of analyst estimates was minus 1.8 percent. From a value of zero percent, Delivery Hero would no longer write any losses.
The company seems to be getting closer to the point in time at which it can report adjusted operating profit for the core business for the first time faster than forecast. The company announced that it was close to breakeven for adjusted Ebitda in May and June.
However, the data and forecasts only relate to the core business, i.e. the delivery of food from restaurants. The new segment of so-called quick commerce, i.e. the super-fast delivery of groceries and goods, is excluded from this. It is still unclear when the company will make a profit on the bottom line.
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Delivery Hero share increases significantly
The news was received positively on the stock market. The share rose by up to 15 percent in the morning to over 49 euros at times. Doubts about when Delivery Hero would be profitable for the first time had caused the share to fall by more than 50 percent since the beginning of the year.
As a result, the group also had to leave the Dax stock market index, which it had climbed into a year earlier. The company is now in the MDax of medium-sized stocks.
Delivery Hero CEO Niklas Östberg emphasized that the company was committed to both expanding its market position worldwide and accelerating the transition to profitability on a consolidated basis. “I am pleased that we have significantly exceeded our targets for the first half of 2022 on both fronts,” he said now. This gives a strong momentum for the second half of the year.
Delivery Hero is showing a slower pace of growth.
(Photo: imago images/Bihlmayerfotografie)
The company apparently benefited from the fact that the entire industry has reduced marketing spending in view of the tense economic situation. Delivery Hero was also able to limit its expenses for acquiring new customers without losing market share.
On the contrary, sales increased sharply. Total sales rose by 38 percent to EUR 2.1 billion in the second quarter, and by a total of 44 percent in the first half of the year. The gross value of goods rose by 18 percent to 9.9 billion euros in the second half of the year. However, it was just below the consensus estimate of 10.1 billion euros.
The pace of growth is slowing
This also shows a slower pace of growth at Delivery. In the first quarter, platform sales had grown by 31 percent. But the management had already declared after the sharp price losses at the beginning of the year that it was now giving more weight to profitability than to growth.
>> Read here: EU competition watchdogs search Delivery Hero offices
However, this is initially made more difficult by the takeover of the Spanish competitor Glovo, which itself has a negative Ebitda. Despite this, Delivery Hero has now upgraded its forecasts for the path to profitability.
The company now expects the platform business to break even on an adjusted EBITDA basis during the third quarter of 2022, and to generate between EUR 40 million and EUR 120 million in the fourth quarter. Previously, the company had only expected Ebitda in the fourth quarter to be between zero and 100 million euros.
More: The descent from the Dax is a blessing for Delivery Hero