Deliveroo is considering a shareholder payout of up to £250m through dividends, as it builds confidence after it cut losses in the first half of the year.
The food delivery app’s losses currently stand at £83m, down from £153m a year ago. According to the firm, it achieved profitability “ahead of expectations” using an adjusted EBITDA metric.
“The company fundamentally is at a very different place to when we went public 30 months ago,” Will Shu, founder and CEO of Deliveroo, said, according to Financial Times. “We are basically free cash flow break-even at this point.”
Revenues jumped 5% during the period, from £973m to £1.02bn. This came as a result of an increase in customer spending per order, in part driven by inflation despite order volumes plunging 6% amid “challenging macroeconomic conditions”.
Deliveroo announced its £50m share purchase programme in March following the completion of a £75m buyback scheme in January. Now, the food delivery group is exploring ways to return an additional £250m of “structural surplus capital” to shareholders.
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Shu commented: “Given we’re well ahead we’re confidently saying we’re going to propose a return to shareholders.
“The industry is large and still early in its maturity, and we are excited by the growth opportunities ahead of us – whether this is daily incremental improvements to the consumer value proposition, or expanding in verticals such as grocery and non-food retail.”
According to Shu, the decision reflects investors’ expectations for a swift return from equities following a rise in interest rates. Additionally, he claimed the move was not related to the upcoming expiry of his dual-class shares, limited to three years, which grant him enhanced voting rights.
Shares in Deliveroo are up by as much as 3.6% as the company upgraded its 2023 adjusted EBITDA guidance to £60-£80m, up from £20m-£50m.
