Deliveroo makes annual profit for first time

The Guardian

13-03-2025

Deliveroo has made an annual profit for the first time, after a bumpy few years since a disastrous stock market listing that earned the takeaway delivery company the nickname 'flopperoo'.
The 12-year-old company, a member of the FTSE 250 index of mid-sized companies, made a profit of £3m in 2024, compared with a loss of £32m in 2023, it said in a statement on Thursday.
The profit came alongside its first year of cash generation, after years of losing hundreds of millions of pounds as the company expanded from a startup to becoming a rare technology company float on the London Stock Exchange in 2021.
Deliveroo said the annual profit came despite an 'uncertain consumer environment', as it pushed beyond takeaways to grocery deliveries, which accounted for 16% of sales in the second half of the year. Its share price fell 8% after analysts flagged 'soft' expectations for future profits.
The firm also added companies such as Ann Summers, B&Q, The Perfume Shop and Not On The High Street to its shopping ranges as it continued to expand its range beyond food.
However, it may be years before investors receive a return. Deliveroo has so far raised about £1bn from venture capital investors, plus another £1bn in its initial public offering.
The company also faces stiff competition, including in the UK from Uber Eats and Just Eat Takeaway, whose new owner, the well-funded South African tech investor Prosus, wants to expand.
The total value of orders through Deliveroo's app and website rose 5% to £7.4bn, giving it revenues of £2.1bn. The company's main markets are Britain and Ireland, with a presence in another eight countries amid still tough competition.
Will Shu founded the company in 2013 with his childhood friend Greg Orlowski, after working long hours as an investment banker in London and despairing at the lack of choice for evening food deliveries to the office. Orlowski quit in 2016.
Deliveroo attracted hundreds of millions of pounds of venture capital investment in the years that followed, with investors attracted by the idea of a technology platform that could quickly expand. Deliveroo's shares floated in 2021 at a market value of £7.6bn, when the valuation of food delivery companies had soared because of coronavirus pandemic lockdowns.
The company initially suffered a difficult float that experienced an immediate slump of 26% in its share price, the worst debut in London's history. The stock recovered to peak at £3.80 later in 2021 as the pandemic fuelled a boom in delivery company shares, but fell to less than 80p in August 2022 as the boom eased.
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Deliveroo also faced significant scrutiny over the conditions for the gig workers who made deliveries. In 2023 it successfully argued that its workers were self-employed, a system that allows it to avoid certain costs of full employment.
In recent years, Deliveroo has sought to become profitable as investor patience wore thin. That helped to raise its share price to more than £1.60 in September, although it is down 12% this year. The push towards profitability has also led to it leaving markets where it was struggling, including an announcement this week that it would leave Hong Kong, after being muscled out by a Chinese competitor.
Shu said: 'The robust results we've announced today, with our first full-year profit and positive free cashflow as well as gross transaction volume growth across our verticals, demonstrate that our strategy is working.'
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: 'It's been a long hard slog but Deliveroo has finally climbed the tough summit of reaching annual profitability … Growth is already highly sluggish in the UK, and there are concerns that the harsh global trade winds blowing could knock recovery off course.'