Delivery Hero Fluctuates on Growth, Lack of Order Disclosure

(Bloomberg) -- Delivery Hero SE shares fluctuated as investors weighed a positive start to the year against the company’s failure to report order numbers.

The German company diverged from its rivals by reporting stronger growth at the start of the year, but that was not enough to ease investor concern. It was also the first time the company didn’t break out order numbers, after shifting to focus on profitability rather than volume. 

“The management has stopped steering the business on this metric for already quite some time,” said a Delivery Hero spokesperson. “Everything is focused on GMV. That’s why it dropped from the management reporting.”

Instead, the company will give additional disclosure on other factors including advertising, regional business, and subscriptions.

After a positive opening in Frankfurt on Thursday, the stock at one point was down as much as 12% and up as much as 10%. Shares were 1.5% higher to trade at 30.36 euros at 3:44 p.m.

“While not a material impact on the operations, given the focus on order numbers in the release and the importance of inflation in food prices to platform models, we think the decision to stop reporting orders may not be welcomed by investors,” said Rob Joyce, analyst at Goldman Sachs. 

The Berlin-based firm said total segment revenue over the first quarter rose 52% year-on-year to 2.05 billion euros ($2.2 billion), below estimates of 2.13 billion euros. 

Gross merchandise value climbed 31% year-on-year to 10.1 billion euros. That compares with an average analyst estimate of 10.08 billion euros in a Bloomberg survey, and marks a further acceleration after the company said GMV rose 30% on-year in the first two months of 2022. 

Rivals have faced a challenging start to the year. Just Eat Takeaway.com NV pared its projections for 2022 and said orders on its platform rose less than expected at the start of the year. Deliveroo Plc also missed expectations for orders in the first quarter.

Delivery Hero confirmed its guidance for this year to generate GMV of between 44-45 billion euros, with 9.5-10.5 billion euros in total segment revenue, and an adjusted EBITDA/GMV margin of around -1.0% to -1.2%.

“I hope we can be spot on, on the top line. We probably have a little bit of a buffer on the profitability line,” Chief Executive Officer Niklas Oestberg said in an interview.

In early April, Delivery Hero said it expected the entire company to hit an adjusted measure of profitability for the first time next year and that it was rolling out a 1.4 billion euro-equivalent financing transaction. The company reiterated that profitability guidance Thursday.

“The in-line performance and guidance reiteration is nonetheless welcome,” Jefferies analyst Giles Thorne wrote in a report. It’s a “positive start to a critical year.”

Key Insights

• Oestberg said that Delivery Hero’s acquisition of Spanish startup Glovo will likely close in the third quarter of this year and was “on track.”
• With Just Eat Takeaway considering a sale of its U.S. unit Grubhub, Oestberg said that he was following the process “from the sideline. We have enough on our plates.”
• The company increased its pro forma cash position to 3.5 billion euros at the end of fiscal-year 2021 through a syndicated debt financing.
• Delivery Hero previously said that Glovo drew down an 125 million euro convertible loan amount on April 20.

Market Context

• Shares in Delivery Hero have fallen around 70% this year before Thursday.

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