Deliveroo and Just Eat Set to Continue Advance Towards Profit Targets

Food delivery firms Deliveroo (LON: ROO) and Just Eat (LON: JET) will report their Q3 trading updates this week, with results likely to highlight the businesses’ cost-cutting efforts, especially since Deliveroo hiked its profit guidance in its last results.

Deliveroo shares have increased over 40% year-to-date (YTD), with its interim results showcasing adjusted EBITDA of £39m, ahead of expectations following improvements in its marketing and overhead costs. Revenue also grew 5%, with a strong performance in the UK & Ireland countering a slightly weaker international market.

Deliveroo stated that they now anticipated full-year EBITDA between £60m and £80m, up from a range of £20m and £50m. The business is continuing to advance, with progress towards its goal of generating consistent positive free cash flow and expansion into the grocery and non-food retail market.

Just Eat painted a similar story in its half-year results back in July. Just Eat stated they are fast approaching their positive free cash flow target after reporting Northern Europe and the UK & Ireland returned to GTV growth in Q2.

Half-year adjusted EBITDA increased to €143 million, with a focus on efficiency in its delivery and general cost savings paying off. As a result, Just Eat expects to achieve a positive adjusted EBITDA of €275m in 2023, reflecting an uncertain macro-economic environment, but also investment in its vertical business.

Deliveroo shares were upgraded last week to Neutral from Underweight at JPMorgan, with the investment firm stating that despite the “tough” conditions, Q3 numbers should meet its new expectations.

Meanwhile, Just Eat shares were upgraded to Neutral from Underperform at Exane BNP Paribas. The analyst cited that given the nearly 40% decline so far this year, Just Eats stock valuation is fair.

By James Fyeman