Delivery Hero delivers on its FY 2023 targets
Successful execution on the growth strategy with a strong focus on profitability, cash generation and disciplined capital allocation
Delivery Hero SE (“Delivery Hero”, the “Company” or the “Group”), the world’s leading local delivery platform, today released its Q4 2023 results, reaffirming that it had hit all of its ambitious targets for Q4 and FY 2023. The Company saw a GMV growth of 7% YoY2 and Total Segment Revenue growth of 16% YoY in Q42, as well as reporting an adj. EBITDA margin of 1.1% in H2 20231. This implies an adj. EBITDA uplift of more than EUR 870 million in FY 20231. The Group also confirmed that it had reached Free Cash Flow Break-even during H2 20231.
Niklas Östberg, CEO and Co-Founder of Delivery Hero, said: “2023 was a landmark year for Delivery Hero as we saw our commitment to a rational growth strategy pay off. We have proven that we can significantly improve profits and cash flows while building on our category leadership. Thanks to the team for all of the great progress we have made towards our goals.”
Platform business sees unprofitable markets mature
Detailing the profitability trajectory, Delivery Hero announced that around 75% of the Platform business is profitable in FY 2023, close to 10 percentage points above 2022, with the profitable Platform business generating an annualized adj. EBITDA of more than EUR 1.3 billion in Q4 2023. Meanwhile, the adj. EBITDA margin of the unprofitable Platform business is performing ahead of expectations. The majority of these markets are at an early stage and experiencing significant growth, with the Company expecting them to move into profitability in the coming quarters.
Dmart profitability trajectory continues
Delivery Hero continued doubling down on the customer value proposition of its Dmarts, prioritizing improved choice by increasing inventory (SKUs) across all units. With this emphasis on consumer experience, the Company saw the continuation of the profitability trajectory of its Integrated Verticals segment, which is predominantly made up of Dmarts. In particular, negative adj. EBITDA margin improved by approximately 60% YoY during Q4 2023, demonstrating a clear path to sustainable profitable growth.
Emmanuel Thomassin, CFO of Delivery Hero, said: “We started 2024 in a strong position to achieve our ambitious adjusted EBITDA and Free Cash Flow targets. We are confident we will deliver substantial future cash flows that will exceed upcoming debt maturities.”
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1 Adj. EBITDA and Free Cash Flow in reported currency and including hyperinflationary accounting. Free Cash Flow is calculated as cash flow from operations (changes in working capital exclude receivables from payment service providers and restaurant liabilities) less capital expenditures (CapEx) and payment of lease liabilities. Free Cash Flow excludes interest income and expense.
2 GMV growth and Total Segment Revenue growth in constant currency and excluding hyperinflationary accounting.
3 Gross Profit after deduction of delivery costs, store related expenses, supply chain costs, promotions and vouchers and excluding hyperinflationary accounting.
4 For Group, Europe, MENA, Americas and Integrated Verticals, revenues and Gross Merchandise Value (GMV) as well as the respective growth rates are impacted by the operations in Argentina, Ghana, Lebanon and/or Turkey qualifying as hyperinflationary economies according to IAS 29. RC = Reported Currency / CC = Constant Currency.
5 Difference between Total Segment Revenue and the sum of segment revenues is mainly due to intersegment consolidation adjustments for services charged by the Platform businesses to the Integrated Verticals businesses.
2024 guidance
With this quarterly release, Delivery Hero confirms the guidance given in its preliminary results, which were released on 5 February 2024. Most significantly, the Group expects an adj. EBITDA of EUR 725-775 million and positive Free Cash Flow1 in FY 2024.
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