British food delivery service Deliveroo said it had achieved twin milestones of profit and free cash flow in the six months to the end of June due to stabilised customer demand.

The company reported a profit of £1.3 million (€1.51 million), compared to a loss of £83 million (€96.28 million) a year earlier, and free cash flow of £3.2 million (€3.71 million), compared to negative cash flow of £27.7 million (€32.13 million).

The company reported gains in all key areas, including a 6% increase in gross transaction value (GTV) and a 2% increase in revenue at constant currency. Order intake increased again by 2%. This was achieved with a stable gross profit margin.

There was also notable GTV growth in the UK and Ireland and International markets, with constant currency GTV growth of 7% in the UK and Ireland and 5% in International.

“Effective implementation”

“I am pleased with the performance we achieved this half year, which was driven by the effective execution of our growth and profitability initiatives,” commented Will Shu, CEO. “As a result, we achieved two important financial milestones: positive free cash flow and positive profit for the period.”

“Looking ahead, while I remain uncertain in the external environment, I am encouraged by the turnaround we are currently seeing in consumer behaviour across many of our markets. The Deliveroo platform is more powerful than ever and we continue to respond to the external environment while further optimising our offering for consumers, riders and merchants. We operate in attractive verticals in large, underserved markets and it is clear there is a lot of room for growth in our industry.”

Analyst’s view

Commenting on Deliveroo’s performance, Sean Kelly of Liberum said: “Deliveroo’s H1 results show a strong performance from the business. GTV growth was in line with consensus and peers, but order growth in UKI remained positive over the quarter, outperforming Jus-Eat Takeaway. A strong +12% EBITDA increase at CC Cons and growing contributions from advertising and grocery stores supported FCF of £3m over the half, with the underlying run rate now exceeding £100m per annum.

“Following the circa £150 million share buyback announced with these results, this pillar of our investment case has materialised.”

Additional reporting by the ESM