By Joe Hoppe
Deliveroo PLC said Wednesday that its first-half pretax loss widened due to increased consumer headwinds, and began a 75 million-pound ($90.6 million) share buyback program.
The U.K. food-delivery company /zigman2/quotes/225812915/delayed UK:ROO +3.83% posted a pretax loss of GBP147.3 million for the half year compared with a loss of GBP95.4 million a year earlier, reflecting higher cost of sales and administrative expenses.
Revenue rose 12% to GBP1.01 billion on the back of higher commission revenue and consumer fees, and an increased advertising contribution.
Gross transaction value rose 7% to GBP3.56 billion from GBP3.39 billion. Growth slowed in the second quarter, reflecting the negative effect of increased consumer headwinds, the company said.
“We are confident that in [the second half] and beyond we will see further gains from actions already taken, as well as benefits from new initiatives,” Founder and Chief Executive Will Shu said.
The company said it will run the share buyback program until March, with the aim of mitigating dilution from share-based compensation plans. Repurchased shares will be held by the employees benefit trust and used for share-based compensation awards.
Deliveroo also said it is proposing to consult on ending its Netherlands operations, which represented 1% of group GTV in the first half, as it believes it would require a disproportionate level of investment to with uncertain returns to reach a top-tier market position. It expects consultation to begin in August with a potential final day of operations toward the end of November.
Deliveroo reiterated that it expects full-year growth in its gross transaction value of between 4%-12% at constant currency, having lowered it in July from previous guidance of 15%-25%. It had lowered it to reflect uncertainties, particularly across European markets, due to inflationary pressures, post-coronavirus consumer behavior, and broader geopolitical and economic effects.
The company maintained its adjusted earnings before interest, taxes, depreciation and amortization margin guidance of minus 1.8% to minus 1.5%.
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