Deliveroo leaves guidance unchanged after strong first quarter

Deliveroo left its full-year guidance unchanged as the food delivery group reported a more than doubling of orders in the first quarter.

In its first trading update as a public company Deliveroo said orders rose 114% to 71 million in the three months to the end of March from a year earlier. The value of customer transactions rose 130% to £1.65bn.

In the UK and Ireland orders rose 121% to 34 million and transaction values increased 142% to £852m. International orders increased 108% to 37 million and the value of transactions was up 119% to £794m.

Deliveroo's business boomed during the Covid-19 crisis as households ordered food to eat at home with restaurants closed to diners during the pandemic. Restaurants in the UK and other markets were shut apart from takeaway and delivery during the first quarter.

The company floated on the London Stock Exchange in March to cash in on its success and raise money for growth but the shares plunged on the first day of trading over doubts about Deliveroo's high valuation, governance and business risks.

Deliveroo said it expected its growth rate to slow as lockdowns ease and that the extent of the slowdown was hard to gauge. The company stuck to guidance in its flotation prospectus for annual gross transactions to rise between 30% and 40% and for gross margins of 7.5-8%.

Chief executive and founder Will Shu said: "This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of Covid-19 restrictions. So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance."

Deliveroo shares fell 0.9% to 267.7p at 09:13 BST - 31% below the company's flotation price of 390p.

"Shu has thrown cold water over earnings expectations, taking a cautious view because the company doesn’t know how easing of lockdown restrictions will affect trading," Russ Mould, investment director at AJ Bell, said. Mould said Shu could be worried about a drop in demand or being careful not to stoke investor expectations.

"Deliveroo’s reputation has already been shattered because of the big share price drop straight after listing. It doesn’t want to risk another slump by being too aggressive with earnings guidance and failing to meet it,” Mould said.