Deliveroo PLC has achieved its first annual profit since going public, marking a significant milestone for the takeaway delivery company that once earned the nickname “flopperoo” following its disastrous stock market debut.
The company reported a profit of £3 million for 2024, a stark turnaround from the £32 million loss recorded in 2023.
Founded in 2013 by Will Shu and Greg Orlowski, Deliveroo has struggled for years to break even as it expanded aggressively from a startup to a major player in the global food delivery industry.
The company’s listing on the London Stock Exchange in 2021, which valued it at £7.6 billion, was marred by an immediate 26% drop in share price, the worst debut in the exchange’s history.
However, Deliveroo’s fortunes have shifted.
In 2024, the company not only posted its first profit but also generated positive cash flow for the first time.
Revenue rose to £2.1 billion, driven by a 5% increase in the total value of orders to £7.4 billion.
The company’s core markets remain Britain and Ireland, with a presence in eight other countries.
Diversifying beyond takeaways
Deliveroo attributed its improved performance to a broader strategy that goes beyond traditional takeaway deliveries.
Grocery deliveries now account for 16% of sales, while the company has also partnered with retailers such as Ann Summers, B&Q, The Perfume Shop, and Not On The High Street to expand its offering.
Despite this progress, Deliveroo’s share price fell 8% following the announcement, as analysts flagged concerns over “soft” expectations for future profit growth.
Competition remains fierce, particularly from rivals like Uber Eats and Just Eat Takeaway, whose parent company, Prosus, is backed by deep-pocketed South African investors.
Challenges ahead
Deliveroo has raised around £1 billion from venture capital investors and an additional £1 billion through its initial public offering.
However, the company’s journey to profitability has come at a cost.
In recent years, Deliveroo has exited unprofitable markets, including a recent decision to leave Hong Kong after being squeezed out by a Chinese competitor.
The company has also faced scrutiny over the working conditions of its gig economy riders.
In 2023, Deliveroo successfully argued in court that its workers are self-employed, allowing it to avoid the costs associated with full employment.
Global trade winds could impact recovery amid slow growth: analysts
Will Shu, Deliveroo’s CEO, hailed the results as evidence that the company’s strategy is working.
“The robust results we’ve announced today, with our first full-year profit and positive free cash flow as well as gross transaction volume growth across our verticals, demonstrate that our strategy is working,” he said.
However, market analysts remain cautious. Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented:
It’s been a long hard slog but Deliveroo has finally climbed the tough summit of reaching annual profitability … Growth is already highly sluggish in the UK, and there are concerns that the harsh global trade winds blowing could knock recovery off course.
As Deliveroo charts a path forward, investors will be watching closely to see whether the company can sustain its newfound profitability in an increasingly competitive and uncertain market.
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