Deliveroo shares jumped on news of first ever profit

Deliveroo (LSE:ROO) shares gained nearly 10% on Thursday, closing up 9.88% to 140.09p, with the gig-work delivery app seeing its first profit.

After a struggle, in tough markets, following its March 2021 float (described by some market commentators as “the worst IPO in London’s history) Deliveroo today gave investors reason to cheer.

Whether the financial results mark a watershed in the firm’s turnaround will yet be determined.

Nevertheless, Deliveroo reported £1.3 million of net income for the first half of 2024, compared to a £82.9 million loss in the same period a year ago.

Deliver said that its total order volume was up 2%, to 147 million, and its gross transaction value per order had improved to £25 – specifically, it said this was due to higher prices being charged by restaurants and shops using its service.

Overall, is credited its positive performance to shifting consumer demand and its expansion to service more grocery and retail deliveries.

“While there is continued uncertainty in the external environment, I am encouraged by the inflection we are currently seeing in consumer behaviour in many of our markets,” chief executive Will Shu said in a statement.

“The Deliveroo platform is more powerful than ever.”

A reported half-year profit, positive free cash flow of £3 million, and an upbeat outlook were also accompanied by a plan to buy back £150 million of shares, to enhance shareholder value.

In the market, meanwhile, Hargreaves Lansdown analyst Matt Britzman said: "Deliveroo hit two of its major financial milestones over the first half centred around positive free cash flow and profitability.

"Commentary suggested encouraging behaviour from those looking for a quick bite to eat, but second-quarter volumes were weaker than expected across both the UK and international markets."