Deliveroo is set to propose a significant shareholder payout as it cuts its losses.
- The company’s financials have improved, with losses reduced from £153m to £83m.
- An increase in customer spending despite fewer orders contributed to a revenue rise.
- Deliveroo achieved profitability ahead of expectations, now eyeing cash flow break-even.
- The strategic move aligns with investor expectations amidst changing market conditions.
Deliveroo has announced plans to propose a shareholder payout of up to £250 million, reflecting confidence in its recent financial turnaround. The food delivery company’s losses have decreased significantly, standing at £83 million compared to £153 million a year prior. This development comes as Deliveroo reports having achieved profitability sooner than anticipated, based on an adjusted EBITDA metric.
Founder and CEO Will Shu highlighted the business’s improved financial health, noting a fundamental change in the company’s position since it went public 30 months ago. Shu stated, ‘We are basically free cash flow break-even at this point,’ conveying the firm’s strengthened financial status.
The company’s revenues increased by 5%, from £973 million to £1.02 billion. This growth was driven by higher customer spending per order, a trend attributed to inflationary pressures, despite a 6% decline in order volume due to challenging macroeconomic conditions.
In March, Deliveroo initiated a £50 million share purchase programme following a £75 million buyback scheme completed in January. The current proposal to return £250 million to shareholders aims to distribute what the company describes as ‘structural surplus capital,’ demonstrating its ongoing commitment to returning value to investors.
Deliveroo’s decision to propose a shareholder return is reflective of investor expectations for quick returns amid rising interest rates, as stated by Shu. Additionally, he noted that this move is independent of the impending expiry of his dual-class shares that grant him enhanced voting rights. Following this announcement, Deliveroo’s shares have increased by up to 3.6%, and the company has raised its 2023 adjusted EBITDA guidance from £20-£50 million to £60-£80 million.
Deliveroo’s strategic financial decisions signify its strong commitment to shareholder value amidst improving financial conditions.
