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- Amazon-backed UK food delivery startup Deliveroo saw strong revenue and gross profit growth in 2019, although the company still suffered a loss.
- Deliveroo’s financial data for 2019 does not cover the impact of the pandemic, which saw the company lay off, nearly go bankrupt, and then rebound as homeworkers ordered more take-out.
- The company is in talks to go public via an IPO and may need to convince investors that an influx of users during the pandemic will stick around for the long haul.
- Visit the Business Insider homepage for more stories.
Amazon-backed food delivery startup Deliveroo posted higher revenues and a healthy gross margin for its full year 2019, but it also saw its losses increase in a set of results that did not include the effects of the pandemic.
Based in the UK and competing with
Uber eats
in Europe and parts of Asia, Deliveroo offers on-demand food, alcohol and grocery deliveries through an app, leveraging a gig-economy network of cyclists and motorcyclists to transport food to customers.
The company, co-founded by the former American banker Will Shu, is aiming for an IPO and will be keen to demonstrate the sustainability of its model.
Here are the key figures for the year as at December 31, 2019:
- Annual revenue of £ 771.8 million ($ 1 billion), up 62% year-on-year.
- Gross profit of £ 188.6million ($ 256million), compared to £ 91.3million, which means a gross profit margin of 24.4%. This is up from a gross profit margin of 19.2% the previous year.
- EBITDA down for the year to – £ 290.7 million (- $ 393 million), compared to – £ 241.2 million (- $ 327 million) in 2018.
- Impairment charge of £ 43 million ($ 58 million) after the closure of Deliveroo Germany.
Deliveroo says its negative EBITDA reflects the costs associated with expanding its delivery subscription program and adding new restaurants to its platform.
Deliveroo’s results have yet to be entered in the UK companies register, Companies House, despite the December 31 deadline. A spokeswoman said the company filed its accounts on December 21 and said the delay was due to the ledger.
A spokesperson for Companies House declined to comment on Deliveroo, but said deposits take longer to process during peak periods.
Deliveroo has shared their financial data with Business Insider, and you can view it here.
Deliveroo has had a roller coaster ride in 2020
Deliveroo’s 2019 results do not reflect the changes in drinking and drinking habits brought on by the coronavirus pandemic, which pushed the majority of white-collar workers in the West to work from home for much of 2020.
Deliveroo will release its audited 2020 results at the end of the year, but has publicly indicated that the pandemic has been good for business.
When the UK first entered a strict lockdown in March, Deliveroo initially warned it could collapse due to an immediate business freeze and the UK competition regulator suspending an injection of funds important to Amazon for antitrust reasons. It also laid off more than 300 employees, according to The Telegraph.
But as the pandemic progressed and after the regulator gave the green light to Amazon funding, Deliveroo’s performance improved. The company coped with the initial restaurant closures by launching a grocery delivery service and cutting fees to persuade more restaurants to join us.
In a statement accompanying its 2019 annual results, the firm said it had been profitable for more than six months “at the operational level.”
When asked for more details, Deliveroo said it has increased the frequency of orders, increased the number of monthly active users and gained more users to its paid subscription service which costs £ 11.49 per month in the UK.
The company also said in its financial statements that the layoffs helped cut expenses.
Deliveroo reserves money for punitive regulations
As the firm discusses an IPO through an IPO, it still faces several risks.
Deliveroo said in its financial statements it had set aside £ 32million ($ 43million) to deal with potentially punitive regulation in an unspecified market. In Spain, a court ruled that Deliveroo drivers are employees rather than freelancers, which could pique the company with higher costs. The Wall Street Journal reported in December that Deliveroo and other food delivery companies had struck a deal with Italian workers to offer them wages above minimum wage, but no sick pay or vacation pay.
Restaurants have also complained publicly and lobbied against the commission that Deliveroo charges. According to a British restaurateur speaking to Sky in October, it’s up to 35%. Deliveroo mainly derives its income from these commissions, as well as usage and delivery fees, and registration fees for restaurants.
Deliveroo has not yet demonstrated its overall profitability. Bigger rivals, like Uber Eats and DoorDash, aren’t profitable either. And while Deliveroo may have benefited from an influx of users during the pandemic, those users might not stick around if vaccine deployments mark a return to on-site dining in 2021.
CEO Will Shu said in a statement, “This year we’ve seen consumers quickly embrace online food delivery, with more people ordering more frequently. Covid has accelerated the strong underlying trends and there is a huge opportunity ahead. “
Shu added that the company would invest in more delivery kitchens, grocery delivery and restaurant tools.
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