Deliveroo Prepares for Public Listing in April

The timeline for Deliveroo’s initial public offering (IPO) in April is now officially underway. Following last week’s announcement regarding a listing on the London Stock Exchange, the on-demand food delivery service, which has backing from Amazon and other investors, has released updated financial data for the prior fiscal year. This was accompanied by its Expected Intention to Float (EITF), signifying a two-week period before the full prospectus is published and the IPO process begins.

Financial Performance and Key Metrics

Despite ongoing growth, Deliveroo remains currently unprofitable. The company reported an underlying loss of £223.7 million ($309 million) for 2020. However, this represents a decrease of almost £100 million compared to the £317 million ($438 million) loss recorded in 2019. Revenue figures were not disclosed in the recent statement.

Deliveroo currently serves approximately 6 million customers. Its marketplace encompasses over 115,000 restaurants, takeaways, and grocery stores, alongside a network of 100,000 riders operating across 800 locations in 12 different markets.

Growth Amidst Challenging Circumstances

The company demonstrated considerable momentum throughout the year, even as many restaurants were forced to close dining rooms and transition to takeaway and delivery services due to the COVID-19 pandemic.

Deliveroo achieved profitability on an Adjusted EBITDA basis for two consecutive quarters. Underlying gross profit increased by 89.5% to £358 million ($495 million), compared to £189 million in 2019.

Transaction Volume and Market Potential

Gross transaction volume – the total value of consumer food orders – grew by 64% to £4.1 billion ($5.67 billion). The fourth quarter saw a surge to a £5 billion run-rate, influenced by the holiday season and multiple lockdown periods in the U.K., Deliveroo’s primary market.

Gross profit margin as a percentage of GTV has risen from 5.8% in 2018 to 8.8% in 2020, with certain markets reaching 12%.

The company identifies a total addressable market of £1.2 trillion ($1.66 trillion) across the 12 regions it serves, encompassing the restaurant and grocery sectors. Currently, only 3% of sales are estimated to be conducted online, representing less than one of every 21 weekly meal occasions.

Valuation and Leadership

Deliveroo was last valued at over $7 billion in January of this year, following a $180 million funding round led by Durable and Fidelity, among others.

CEO and founder Will Shu expressed a humble perspective on the company’s rapid growth. He noted his initial lack of experience in the startup world, stating he wasn’t driven by a pre-existing entrepreneurial ambition but rather by a personal need for convenient access to quality restaurant meals.

Future Investment and Expansion

Deliveroo intends to invest in its long-term growth by refining its core marketplace, improving the consumer experience, and providing tools for restaurant and grocery partners to expand their businesses. It also aims to continue offering riders flexible work opportunities with associated security.

Planned expansions include further development of “dark kitchens” (branded as Editions), Signature (a white-label delivery service for restaurants), Plus (a loyalty subscription program), and on-demand grocery services, which are anticipated to be a significant market in Europe and globally.

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