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Deliveroo Lifts Guidance As Efficiency Drive Delivers

By Donna Ahern
Deliveroo Lifts Guidance As Efficiency Drive Delivers

Britain's Deliveroo lifted its earnings guidance sharply on Thursday after it improved its algorithm to deliver meals and groceries more efficiently, sending its shares up 4%.

Founder and chief executive Will Shu said Deliveroo had made a "lot of progress" on improving its earnings in challenging market conditions that saw total order numbers drop by 6% in the first half.

The group, which has 162,000 restaurants and 20,000 grocery sites on its platform, reported adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 39.4 million pounds ($50.27 million), reversing a 51.6 million pound loss a year earlier.

Its operating margin rose to 1.1%, from 0.2% in the second half of 2022 and a negative margin of 1.5% a year ago.

More efficient delivery had also reduced customer complaints and cut refunds, Shu said.



Deliveroo increased its full-year EBITDA forecast to £60-80 million, from £20-50 million.

Shu said the group, which competes with Just Eat and Uber Eats in markets in Europe, the Middle East and Asia, was also moving closer to its goal of generating positive free cash flow.

"I wouldn't say we're sustainably there yet, but we're pretty close," he told Reuters in an interview.

He said with cash generation on the horizon and around £1 billion on its balance sheet, the group would return 250 million pounds to shareholders.


"We've got big ambitions (...) but you don't need all of it, and the responsible thing is to return some of it to shareholders," he said.

Shares in Deliveroo, which are up 44% so far this year, were up 3% by 1007 GMT.

The total gross transaction value of the group's orders increased 3% in the first half, as inflation in restaurant and grocery prices more than offset the drop in order numbers.

News by Reuters, edited by Donna Ahern, Checkout. For more technology stories, click here. Click subscribe to sign up for the Checkout print edition.

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