Profitability for Delivery Hero is drawing near
Delivery Hero, the Berlin-based food delivery service, is experiencing growth despite the challenging year, expanding its services to deliver not only restaurant meals but also groceries. This growth is noteworthy given the challenging economic conditions.
The company's stock, which was at 99 euros at the beginning of the year, saw a significant rise by midday, climbing by 12 percent to 56.40 euros. This surge can be attributed to a combination of factors, including increased outdoor activities and dining, as well as continued use of food delivery services, according to Delivery Hero's Chief Financial Officer, Emmanuel Thomassin.
In the second quarter, Delivery Hero's gross merchandise value (GMV) increased by 18% to 9.9 billion euros compared to the previous year. This growth reflects the company's successful expansion across approximately 70 countries globally, driven by its online food ordering and delivery services.
Emmanuel Thomassin, in a statement to Reuters, asserted that Delivery Hero is probably the fastest-growing food delivery service currently. He further stated that the company is on a path towards profitability, as indicated by the results of the second quarter.
Delivery Hero has confirmed its adjusted forecast for the full year 2022, expecting a gross merchandise value between 44.7 and 46.9 billion euros and a total segment revenue between 9.8 billion euros and 10.4 billion euros. The forecast for the full year 2022 suggests continued growth and a move towards profitability.
Niklas Östberg, CEO and co-founder of Delivery Hero, also stated the company's continued efforts towards achieving its adjusted EBITDA target for the platform business in the business year 2022. Delivery Hero expects to achieve the adjusted EBITDA break-even point with its platform business in the third quarter.
Delivery Hero aims to achieve a positive adjusted EBITDA for the entire group in the business year 2023. The company's management is optimistic about the company's prospects, as stated by Emmanuel Thomassin.
Jefferies maintains its "Buy" rating with a price target of 95 euros for Delivery Hero's stock, reflecting the analysts' confidence in the company's growth potential. Delivery Hero anticipates generating between 40 and 120 million euros in the fourth quarter.
The forecast for Delivery Hero's profitability and growth in 2022 and 2023 indicates strong revenue growth but persistent net losses, with improving financial metrics over time. While exact forecasts for 2022 specifically are historical now, data implies continued growth during those years as well, with analysts expecting further margin improvement in the near term. However, Delivery Hero still posted negative net income during 2022 and 2023, typical for tech-driven growth companies investing heavily in expansion before profitability.
In summary, Delivery Hero’s outlook for 2022 and 2023 involved rapid revenue growth with ongoing operational losses, but key profit metrics such as adjusted EBITDA showed notable improvement, signaling progress toward sustainable profitability. The company's second-quarter results further confirm this progress.
The surge in Delivery Hero's stock price by 12 percent can be linked to its growth in the business and finance sector, as indicated by the significant rise in its stock value and the projected growth for the full year 2022. The company's expansion of services and successful operation across 70 countries have contributed to its increased gross merchandise value, a key measure in the finance sector, suggesting a prosperous future in the business industry.
