Strong growth, strategic progress,
path to breakeven and long-term profitability

Operational Overview     

●    Strong year of growth with 2021 gross transaction value* (GTV) up 70% year-on-year in constant currency*

●    Further UK market share gains as UKI grew GTV* by 71% year-on-year; UK population coverage expanded to 77% at end-2021 vs 53% at end-2020, planting the seeds for future growth

●    Strengthened leading on-demand grocery position, reaching 8% of GTV* in 2021, with >11,000 partner sites live globally at end-2021 vs ~7,000 at end-2020; launched Deliveroo Hop, a new rapid grocery delivery service

●    Continued to scale Plus and Editions - good momentum in these differentiated offerings, growing UKI Plus subscribers four-fold in the year and adding more than 100 Editions delivery-only kitchens globally

●    Strong rider satisfaction with 85% globally saying they are satisfied or very satisfied working with Deliveroo; attraction and retention rates remained robust during 2021 despite rising job vacancies across economies

●    Bolstered financial resources raising £1.1 billion net proceeds from IPO in April 2021 and Series H fundraising in January 2021; ended 2021 with no borrowings and £1.3 billion in cash and cash equivalents

Financial Overview^[1]

●    Revenues up 57% to £1,824 million, primarily due to the increase in GTV*

●    Loss before income tax of £(298) million in 2021 compared to £(213) million in 2020

●    Cash and cash equivalents of £1,291 million at 31 December 2021 vs £379 million at 31 December 2020

●    Gross transaction value* up 70% to £6,631 million; GTV* growth was 104% in H1 and 46% in H2 2021, showing continued strength despite reopening effects and an increasingly tough comparison base

●    Gross profit* up 43% to £497 million; gross profit margin (as % of GTV)* of 7.5%, down from 8.7% in 2020 due to accelerated investments in consumer acquisition and retention to support future growth, as well as the reversal of benefits from higher basket sizes during COVID-related lockdowns

●    Adjusted EBITDA* was a loss of £(131) million compared to £(11) million in 2020, as higher aggregate gross profit was offset by increased marketing spend (to drive awareness and new consumers) and investment in technology (scaling the technology team to support future growth)

Financial Guidance

●    2022 GTV* growth: expected to be in the range of 15-25% (in constant currency*), with higher growth rate in H2 than in H1, given tough comparison base in H1 (and especially Q1) as last year's COVID restrictions are lapped

●    2022 adjusted EBITDA*: expected to be in the range of (1.5)-(1.8)% as a % of GTV*, an improvement against (2.0)% in FY 2021 and (3.2)% in H2 2021

●    Guidance for 2022 reflects current uncertainties, particularly across European markets, due to inflationary pressures, post-COVID consumer behaviour, and the broader geopolitical and economic impacts of the conflict in Ukraine

●    Medium-term guidance: GTV* growth expectations maintained in the range of 20-25% p.a. (in constant currency*); Deliveroo aims to reach adjusted EBITDA* breakeven at some point during H2 2023-H1 2024, the next key milestone on the path to achieving its longer term profit ambitions

●    Longer-term guidance: Deliveroo aims to reach an adjusted EBITDA margin (as % of GTV)* of 4%+ by 2026, with further upside potential beyond 2026, driven by an expansion of gross profit margin (as % of GTV)* and reduction of marketing and overheads (as % of GTV)*

Will Shu, Founder and CEO of Deliveroo, said:

"We have continued to make good progress in executing our strategy and I am proud of our performance in 2021. We grew rapidly across all of our markets, with 70% GTV growth in constant currency - at the top end of our previously-upgraded guidance range. Particularly encouraging to me was our performance in the UK and Ireland, where we continued to grow our market share and achieved profitability on an adjusted EBITDA* basis in a competitive environment - highlighting the strength of our consumer value proposition.

We are pleased to have strengthened our proposition for our marketplace in 2021, increasing choice for consumers, offering riders more security in the form of improved insurance, and giving our restaurant and grocery partners opportunities to grow their businesses.

We are excited about the opportunities ahead and have today laid out our plans on our longer-term path to profitability. This is a key focus for the Company this year and beyond. We aim to reach breakeven at some point during H2 2023-H1 2024 on an adjusted EBITDA* basis. And by 2026, we aim to reach a 4%+ adjusted EBITDA margin*, with further upside potential beyond 2026.

At the same time, this year it is clear that all three sides of our marketplace in Europe will face headwinds due to inflationary pressures, the removal of economic stimulus and the broader geopolitical and economic impacts of the conflict in Ukraine. We will continue to monitor developments closely. Our 2022 guidance reflects our caution on these factors, but we are confident in our ability to adapt financially to a rapidly changing macroeconomic environment. 

I'd like to thank the Deliveroo team, our restaurant and grocery partners and our riders for their focus and commitment in 2021 despite a challenging backdrop."

Summary Financial Information

* Alternative Performance Measure (APM), refer to glossary on pages 40 to 41 for further details

**n.m. - not meaningful
 GTV* change in constant currency* was 70% for Group, 71% for UK & Ireland, and 69% for International

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is being released on behalf of Deliveroo PLC by Catherine Sukmonowski, Company Secretary.
 

Analyst and investor call

A conference call and webcast with Q&A for analysts and investors will be held at 09:00 GMT / 10:00 CET on
17 March 2022. Participants can register for the conference call at https://secure.emincote.com/client/deliveroo/fy-2021/vip_connect  and the webcast link is https://secure.emincote.com/client/deliveroo/fy-2021. The webcast will also be available to view at https://corporate.deliveroo.co.uk/. A replay will be made available later.

Contacts

Investor Relations

David Hancock, VP Investor Relations - investors@deliveroo.co.uk
Tim Warrington, Investor Relations Director - investors@deliveroo.co.uk 

Media Relations

Joe Carberry, VP Communications - 07787 561905

Romilly Dennys, Head of Corporate Communications, UKI - 07786 221309

Tulchan Communications, James Macey White, Jessica Reid, Mark Burgess - deliveroo@tulchangroup.com

About Deliveroo plc ('Deliveroo' or 'the Company')

Deliveroo is an award-winning delivery service founded in 2013 by William Shu and Greg Orlowski. Deliveroo works with around 160,000 most-loved restaurants and grocery partner sites, as well as over 180,000 riders to provide the best food delivery experience in the world. Deliveroo is headquartered in London, with offices around the globe. Deliveroo operates across 11 markets, comprising Australia, Belgium, France, Hong Kong, Italy, Ireland, Netherlands, Singapore, United Arab Emirates, Kuwait and the United Kingdom.

Additional Notes

This announcement may include forward-looking statements, which are based on current expectations and projections about future events. These statements may include, without limitation, any statements preceded by, followed by or including words such as "target", "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "can have", "likely", "should", "would", "could" and any other words and terms of similar meaning or the negative thereof. These forward-looking statements are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and its investments, including, among other things, the development of its business, trends in its operating environment, and future capital expenditures and acquisitions. The forward-looking statements in this announcement speak only as at the date of this announcement. These statements reflect the beliefs of the Directors, (including based on their expectations arising from pursuit of the Group's strategy) as well as assumptions made by the Directors and information currently available to the Company. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate and none of the Company nor any member of the Group, nor any of such person's affiliates or their respective directors, officers, employees, agents and/or advisors, nor any other person(s) accepts any responsibility for the accuracy or fairness of the opinions expressed in this announcement or the underlying assumptions. Actual events or conditions are unlikely to be consistent with, and may differ significantly from, those assumed. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. No representation or warranty is made that any forward-looking statement will come to pass. No one undertakes to update, supplement, amend or revise any forward-looking statements. You are therefore cautioned not to place any undue reliance on forward-looking statements.

Operating and Strategic Review

In this section, all growth rates are year-on-year and in reported currency unless otherwise stated, and all 2020 and 2021 figures exclude results from Spain, where operations ended in November 2021 and are treated as discontinued operations. The following commentary includes discussion of statutory measures such as revenue and operating loss, as well as alternative performance measures (APMs) such as gross transaction value (GTV)*, gross profit margin (as % of GTV)* and adjusted EBITDA*, as the business also uses these metrics to monitor and assess performance. A full list of APMs and their definitions can be found on pages 40 to 41. More detailed discussion of statutory results is contained in the Financial Review beginning on page 14.

1. Key Developments in 2021

Growth

Deliveroo made strong progress in 2021. Full year gross transaction value (GTV)* was up 70% year-on-year in constant currency*. This is at the top end of revised guidance for 60-70% growth provided in October 2021 (upgraded from prior guidance of 50-60% growth provided in July 2021 and 30-40% growth provided in March 2021). Performance in the UK was particularly encouraging, with continued growth in market share in a competitive environment. This demonstrates the differentiation of Deliveroo's consumer value proposition and focus on execution. Deliveroo expanded UK population coverage to 77% at the end of 2021 compared to 53% at the end of 2020, planting the seeds for future growth.

On-demand grocery

In the last three years, Deliveroo has built a leading position in the on-demand grocery segment, and in H2 2021 grocery reached 8% of total GTV*. Deliveroo had over 11,000 grocery partner sites live globally at the end of the year. In September 2021, Deliveroo announced the launch of a new rapid grocery delivery service. 'Deliveroo Hop' will operate from delivery-only grocery stores, enabling deliveries in as little as 10 minutes and greater inventory accuracy. This model is still in the early stages of development, and is currently being operated with several different grocery partners in the UK and Italy.

Plus

Since 2017, Deliveroo's Plus subscription programme has unlocked access to unlimited free delivery for a fixed monthly fee. In 2021, the programme was broadened significantly. In Q1 2021, a new 'Silver' tier of the programme designed for families was launched. Strong initial take-up has been further boosted since September, when Deliveroo launched a new offering with Amazon Prime, allowing all UK and Ireland Amazon Prime members to sign up for free Deliveroo Plus membership for a year, with unlimited free delivery on orders over £25/€25. Traction from the programme has been impressive, with the number of new Plus subscribers exceeding management's initial expectations; by December 2021, the number of Deliveroo Plus subscribers in UKI had approximately tripled compared to August 2021. Growth in subscribers was driven by conversion of existing Deliveroo consumers to Plus as well as bringing new consumers to Deliveroo for the first time.

Editions

Deliveroo continues to scale other category innovations that drive long-term differentiation of the consumer value proposition. Editions is Deliveroo's delivery-only kitchens concept that allows restaurant partners to bring their brands to new locations and gives consumers access to a wider range of the best, exclusive restaurant content. The rollout of Editions accelerated during the course of 2021, with over 100 kitchens added in the year of which approximately half opened in Q4 2021, bringing brands like Dishoom, Five Guys, Shake Shack and Pho to new neighbourhoods.

Spain

In 2021, the Company made the difficult decision to end its operations in Spain. Deliveroo determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns, which could impact the economic viability of the market for the Company. As such, the decision to end operations in Spain reflected the intention to focus investment and resources on the Company's other markets.

Riders

Deliveroo has provided riders with free and automatic accident and injury cover and third-party liability insurance since 2018. During Q3 2021, Deliveroo extended this free insurance to provide riders with enhanced protection in several markets. The new insurance coverage includes earnings support for riders working regularly with the Company who are unwell and unable to work for more than 7 days (backdated to day 1). In addition, insurance now entitles qualifying riders to a one-off lump sum payment following the birth or adoption of a child. Deliveroo is currently exploring extending these enhanced entitlements to additional markets. In 2021, rider attraction and retention rates remained robust despite rising job vacancies across economies as lockdown restrictions were lifted, providing further evidence that riders value the flexible self-employed work that Deliveroo offers.

Team

To support the continued growth in the business, Deliveroo welcomed many new colleagues this year. Amongst the new starters were two additions to the executive team. Eric French joined in January 2021 as Chief Marketplace Officer. Prior to joining, Eric worked at Amazon for 15 years holding a variety of leadership positions, most recently as Vice President for US Consumables where he had responsibility for the household, beauty, baby, and grocery categories. In September 2021 he was followed by Devesh Mishra, Chief Product and Technology Officer. Devesh also joined from Amazon, where most recently he was Vice President, Global Supply Chain. In this role Devesh oversaw a team of thousands made up of engineers, data scientists and product managers, building and operating a supply chain spanning 185 markets and using data analytics, predictive technology and machine learning to scale Amazon's retail and marketplace business. Both Eric and Devesh have made a real impact already, and they and the whole team are excited about executing on the opportunities ahead.

2. Group Operating Performance

Gross transaction value (GTV)* was £6,631.0 million, an increase of 67%, or 70% in constant currency*. The primary driver of GTV* growth in the year was an increase in the number of monthly active consumers (MACs). MACs averaged 7.5 million during the year, an increase of 64% compared to 2020, and in Q4 2021 the average number of MACs reached 8.0 million. Average order frequency increased slightly from 3.2 times per month in 2020 to 3.3 times per month in 2021, as increased frequency among maturing older cohorts offset the addition of new consumer cohorts, which typically start with a lower frequency.

As a result of the increase in MACs and average order frequency, orders increased by 73% to 300.6 million in 2021. GTV per order* fell to £22.1, down by 80p versus 2020 as basket sizes normalised following the lifting of COVID-19 restrictions in the majority of markets during the course of the year. This effect occurred predominantly during Q2 and Q3 2021; in Q4 2021 GTV per order* stabilised, increasing by 1% in constant currency* compared to Q3.

* Alternative Performance Measure (APM), refer to glossary on pages 40 to 41 for further details

**n.m. - not meaningful

Change in constant currency* was 70% for GTV* and (2)% for GTV per order*

Deliveroo generates revenue primarily from restaurant and grocer commissions and from consumer fees, with limited additional revenue from advertising and other sources at this stage. In 2021, revenue was £1,824.4 million, an increase of 57%. This was below the growth rate in GTV*, reflecting a reduction in the revenue take rate* (i.e. revenue as a percentage of GTV) to 27.5% in 2021 from 29.2% in 2020. This reduction was the result of (i) a lower blended commission rate (primarily due to mix shifts, such as an increase in the proportion within GTV* of grocery, where commission rates are typically lower), and (ii) lower consumer fees as a percentage of GTV* (primarily due to growth in Plus, where consumer fees can be lower on a per order basis, offset on an aggregate basis by increased order frequency).

Gross profit is calculated as revenue less costs of sales, which primarily comprises delivery costs and credit card fees. Gross profit for the year was £497.3 million, an increase of 43% compared to 2020. The gross profit margin (as % of GTV)* was 7.5% in 2021 compared to 8.7% in 2020. Within 2021, gross profit margin (as % of GTV)* reduced from 7.8% in H1 2021 to 7.2% in H2 2021. The year-on-year and sequential movements in 2021 were driven by the reversal of benefits from higher basket sizes during COVID-related lockdowns, as well as investments to support future growth. These include investments to drive consumer acquisition (such as the New User Experience programme) and retention (via the Plus subscription offering), and to create differentiated content for consumers through Deliveroo's restaurant and grocery selection.

Investment in marketing and overheads* increased substantially in 2021 compared to the prior year. During most of 2020, Deliveroo took a very conservative approach to deploying capital, given capital constraints as a result of the CMA antitrust investigation, and the fact that long-term consumer behaviour was uncertain during the initial lockdowns in early 2020. Starting in Q4 2020, Deliveroo was much better positioned to increase investment, with a strong capital position following the conclusion of the CMA investigation in Q3 2020, the completion of the Series G and the Series H fundraising rounds, and the IPO in April 2021. Deliveroo also now has strong conviction that the pandemic has accelerated the secular shift in consumer behaviour, moving demand in food online.

Marketing and overheads* were £628.7 million in 2021 compared to £358.5 million in the prior year. Increased marketing costs year-on-year included additional spend in growth marketing (to support directly the acquisition of new consumers and retention of existing consumers) and brand marketing (to drive consumer brand awareness). Increased investment in overheads was particularly focused on technology, which will continue to be the case in 2022. Technology investment is directed towards building assets that: (1) drive direct financial benefits, through revenue generation (e.g. advertising platforms) or cost reduction (e.g. self-serve capabilities for consumers, partners and riders); (2) provide the enabling technology for particular businesses (e.g. for Deliveroo Hop delivery-only stores); and (3) provide supporting infrastructure for scaling the business efficiently (e.g. platform stability, forecasting models for consumer demand and rider supply).

Adjusted EBITDA* was £(131.4) million in the year, compared to £(10.8) million in 2020, as higher aggregate gross profit was more than offset by a step-up in investments in marketing and overheads* to support future growth. The investments were weighted to the second half of the year, with marketing and overheads* of £286.2 million in H1 2021 increasing to £342.5 million in H2 2021.

Adjusted EBITDA margin* was (2.0)% in 2021, compared to (0.3)% in 2020. Within 2021, adjusted EBITDA margin* was (0.8)% in H1 2021 and (3.2)% in H2 2021. Both the year-on-year and sequential movements in 2021 were attributable to the reduction in gross profit margin (as % of GTV)* and increased rate of investment to support future growth that are described above.

Operating loss in the period was £(304.3) million, compared to £(208.8) million in 2020. Included in operating loss in 2021 were: depreciation and amortisation of £43.0 million (£34.4 million in 2020); share-based payments charge and accrued national insurance on share options of £87.6 million (£73.2 million in 2020); legal and regulatory settlements and provisions of £7.5 million (£70.9 million in 2020); and exceptional costs of £35.4 million (£22.5 million in 2020).

3. Segment Performance

Deliveroo manages its business on a geographic basis, rather than on a product or market segmentation basis. The Company operates in two segments: the UK and Ireland (UKI) segment and the International segment, comprising the remainder of the Company's markets.

UK and Ireland

In 2021, the UKI segment represented 54% of total GTV*. Deliveroo operates in close to 250 towns and cities across the UK & Ireland.

* Alternative Performance Measure (APM), refer to glossary on pages 40 to 41 for further details

Change in constant currency* was 71% for GTV* and (1)% for GTV per order*

In UKI, GTV* grew to £3,570.0 million in 2021, an increase of 71%. Year-on-year GTV* growth slowed sequentially during the year, from 142% in Q1 2021 to 36% in Q4 2021, both in constant currency*. This reflects an increasingly tough comparison base in the prior year, as well as lifting of COVID-related restrictions during the course of 2021. In 2021, orders grew by 72% to 147.7 million, primarily driven by a 64% increase in monthly active consumers, along with a slight increase in average order frequency. GTV per order* was down 1% in constant currency* to £24.2.

UKI revenue grew 64% to £980.7 million in 2021, primarily due to the increase in GTV*. Gross profit was £330.3 million in 2021 compared to £217.2 million in 2020, an increase of 52%. Gross profit margin (as % of GTV)* was 9.3% compared to 10.4% in 2020. This decrease was driven by the reversal of benefits from higher basket sizes during COVID-related lockdowns, as well as accelerated investments in consumer acquisition and retention to support future growth. Adjusted EBITDA* was £91.1 million in 2021, compared to £80.5 million in 2020, as increased aggregate gross profit was partially offset by continued investments in growth, including marketing and headcount additions. Adjusted EBITDA* was £55.3 million in H1 2021 and £35.8 million in H2 2021, with the sequential reduction primarily reflecting the phasing of growth investments and the reversal of benefits from higher basket sizes during COVID-related lockdowns.

During the period, Deliveroo continued to add differentiated content for consumers. UKI restaurant selection was further expanded, and in 2021 the Company added c.19,000 new sites, increasing the base of restaurants by 55%. The Company also continued to roll out its grocery offering: at the end of the period, Deliveroo had approaching 6,000 grocery sites live in the UKI across major partners and smaller independent partners, an increase of more than two-thirds compared to the end of 2020.

Alongside achieving strong growth in 2021, Deliveroo made excellent progress in delivering its geographic expansion plan - planting the seeds for future growth. At the beginning of 2021, the Company set out a goal to expand consumer population coverage to two-thirds of the UK population by year-end 2021, up from 53% at year-end 2020. As a result of strong operational execution, the UK expansion was well ahead of the original target, with 72% coverage of the UK population achieved at the end of June and 77% at the end of December.

International^[2]

In 2021, the International segment represented 46% of total GTV*. Deliveroo's International segment comprises 9 markets across Europe, the Middle East and Asia Pacific.

* Alternative Performance Measure (APM), refer to glossary on pages 40 to 41 for further details

**n.m. - not meaningful

Change in constant currency* was 69% for GTV* and (3)% for GTV per order*

In International, GTV* grew to £3,061.0 million in 2021, an increase of 69% in constant currency*. Year-on-year GTV* growth slowed sequentially during the year, from 125% in Q1 2021 to 36% in Q4 2021, both in constant currency*. This reflects an increasingly tough comparison base in the prior year, as well as lifting of COVID-related restrictions during the course of 2021 in European markets. In 2021, orders grew by 74% to 152.9 million, primarily driven by a 64% increase in monthly active consumers, along with a slight increase in average order frequency. GTV per order* was down 3% in constant currency* to £20.0 for the year.

Revenue for International grew 50% to £843.7 million in 2021, primarily due to the increase in GTV*. Gross profit was £167.0 million in 2021 compared to £130.5 million in 2020, an increase of 28%. Gross profit margin (as % of GTV)* was 5.5% compared to 6.9% in 2020. This decrease was driven by the reversal of benefits from higher basket sizes during COVID-related lockdowns, as well as accelerated investments in consumer acquisition and retention to support future growth. Adjusted EBITDA* was £(56.0) million in 2021, compared to £6.9 million in 2020, as increased aggregate gross profit was offset by continued investments in growth. Adjusted EBITDA* was £(10.3) million in H1 2021 and £(45.7) million in H2 2021, with the sequential movement primarily reflecting the phasing of growth investments and the reversal of benefits from higher basket sizes during COVID-related lockdowns.

Across the International segment, growth in 2021 was supported by strengthened relationships with restaurant partners, especially in France, Hong Kong and UAE. During the period, the Company also expanded its grocery offering, continuing the rollout with key partners such as Carrefour in France, Italy, and Belgium and Casino in France, and signing Park N Shop in Hong Kong and Picard in France. At the end of the year, Deliveroo had approaching 6,000 grocery sites live with major partners and smaller independent grocery partners across International markets.

In Q3 2021, Deliveroo determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns, which could impact the economic viability of the market for the Company. Deliveroo announced on 30 July 2021 that it proposed to consult on ending its operations in Spain. The consultation concluded in November and Deliveroo decided to proceed with the proposal; the last day of operations was 29 November 2021. The discontinuation of operations in Spain reflects the intention to focus investment and resources on the Company's other markets.

4. The Three Sides of the Marketplace

Since 2013, Deliveroo has pioneered on-demand food delivery via a hyperlocal three-sided online marketplace, connecting local consumers, restaurants and grocers, and riders. For consumers, Deliveroo has unlocked broad  choice and fast delivery times, working with restaurants and grocers who overwhelmingly have never offered an online presence and on-demand deliveries before. For restaurants and grocers, Deliveroo not only provides logistics, but, more importantly, an incremental demand generation channel, including access to millions of new consumers alongside online tools to grow their business effectively. For riders, Deliveroo offers highly flexible work which they can rely on for attractive earnings and security. In 2021, Deliveroo made further progress in developing all three sides of the marketplace.

Consumers

Deliveroo's consumer base continued to grow through 2021, with an average of 8.0 million monthly active consumers (MACs) in Q4 2021, up 37% compared to Q4 2020 and up 123% compared to Q4 2019. Average order frequency increased in 2021 compared to 2020, and reached 3.4 per month in Q4 2021.

Deliveroo tracks consumers on the basis of historical cohorts, with each cohort representing consumers who placed their first order on the platform in a given period (for example, the 'January 2018 cohort' represents consumers who placed their first order in January 2018). Historically, consumer cohorts have consistently increased their average order frequency over time. Encouragingly, this pattern has continued in 2021, despite lockdown restrictions easing. For example, consumers in the UKI 2018 cohort had a monthly average order frequency of 3.1x in Q4 2019, increasing to 3.5x in Q4 2020 and 3.8x in Q4 2021.

Restaurants and On-demand Grocery

Restaurant selection is an important part of Deliveroo's consumer value proposition. Growth in restaurant selection increases availability and choice to consumers on a neighbourhood by neighbourhood basis. The number of partner restaurant sites continues to increase, and at the end of the year Deliveroo worked with over 148,000 restaurant partner sites globally, compared to 102,000 at the end of 2020.

As well as bringing partners' existing restaurant sites onto the platform, Deliveroo has continued to develop Editions, its delivery-only kitchens concept. Editions provides additional value to all three sides of the marketplace. Restaurant partners use Editions to bring their brands to new neighbourhoods without needing to open a new dine-in location; they also use Editions even in areas where they have a restaurant, as delivery-only kitchens allow them to separate and optimise their dine-in and delivery operations. Consumers enjoy the increased availability in their area of most-loved brands - evidenced by the fact that Editions can account for 10-15% of total orders within the zone of their delivery radius. And riders benefit from increased earnings opportunities, including the fact that the efficiency of the delivery-only kitchens means reduced wait-time at restaurants, increasing their earnings potential. During 2021, Deliveroo added more than 100 Editions kitchens to bring the total to over 300. The increased pace of expansion of Editions sites in 2021 was reflected in the increase in the Group's purchase of property, plant and equipment, which amounted to £21.4 million in 2021 compared to £5.8 million in 2020. With a strong pipeline of sites, Editions openings are expected to continue to bring the best, exclusive restaurant content to a wider range of consumers.

Deliveroo also continues to develop its on-demand grocery offering. This offers powerful synergies with the core platform, representing incremental demand to the restaurant offering and providing an effective customer acquisition channel. Unit economics for grocery offer potential for further improvements by driving higher basket sizes, improving selection and inventory management, and by adding non-commission revenue from fast-moving consumer goods (FMCG) companies as advertising spend in the category moves online.

On-demand grocery continued to grow as a percentage of total GTV* over the last two years, increasing to 8% of total GTV* in H2 2021, compared to 6% in H2 2020. In UKI, Deliveroo now has approaching 6,000 grocery sites live with major partners and smaller independent partners. Coverage has reached 76% of the UK population with major grocery partners, including Waitrose, Co-op, Morrisons and Sainsbury's, up from 36% at the end of Q1 2020. In International, Deliveroo now has approaching 6,000 partner sites live. Growth has been driven by continued rollout with key grocery partners, such as Carrefour in France, Italy, and Belgium, Casino in France, and Park N Shop in Hong Kong.

To complement its leading network of partner store-picked grocery sites, Deliveroo launched a new rapid grocery delivery service called 'Deliveroo Hop' in September 2021. Hop operates from delivery-only grocery stores run by Deliveroo, working in partnership with established grocers. The first Hop stores were established in London in partnership with Morrisons; since the end of 2021, further Hop partnerships have been launched in the UK with Waitrose and in Italy with Carrefour.

Hop enables deliveries in as little as 10 minutes, greater inventory accuracy, and a wider product range - including partner-branded products such as Waitrose own-label products and Morrisons 'The Best' range. The service benefits from a deep integration between Deliveroo's new grocery management technology, existing logistics algorithms and network of delivery riders, as well as partners' established supply chain.

Riders

Riders are a vital part of Deliveroo's three-sided marketplace and Deliveroo works with over 180,000 riders globally. Riders value the flexible work Deliveroo offers, enabling them to set their own work patterns without having to plan ahead, select which orders to accept or reject, and to work with multiple companies simultaneously. This is reflected in high satisfaction ratings, with 85% of riders globally saying they are satisfied or very satisfied working with Deliveroo.

Deliveroo continues to see strong rider application pipelines and rider retention rates. In 2021, as lockdowns eased across several markets in Q2 and Q3 and the availability of employment vacancies increased, rider applications and retention remained high, underlining the popularity of the work Deliveroo offers.

Since 2018, Deliveroo has provided riders with free and automatic accident and injury cover and third-party liability insurance. During Q3 2021, Deliveroo extended this to provide riders with enhanced protection in several markets. The new insurance coverage Deliveroo offers includes earnings support for riders working regularly with the company who are unwell and unable to work and qualifying riders are now entitled to a one-off lump sum payment following the birth or adoption of a child. Deliveroo is currently exploring extending these enhanced entitlements to additional markets.

The independent contractor status of riders continues to be the subject of scrutiny in certain markets. Highlights of the material developments that occurred in 2021 in Deliveroo's markets are:

●    In the UK, the Court of Appeal confirmed in June by unanimous decision that riders are self-employed, the fourth such judgement in the UK courts;

●    In France, the Paris Court of Appeal confirmed in April that Deliveroo offers self-employed work and the Government has brought forward legislation that protects platform workers' self-employed status; there are also ongoing challenges into historical models in France that are being defended;

●    In Italy, Deliveroo continues to work in a Collective Bargaining Agreement that recognises riders as self-employed and settled the investigation into a historical model by the health and safety authorities; challenges to certain of Deliveroo's models by other Italian authorities remain ongoing;

●    In Spain, a new law outlining criteria to determine the status of platform workers came into force in August; this will not impact Deliveroo on an ongoing basis as separately, Deliveroo decided to end operations in Spain, having determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns;

●    The European Union published proposals for a reform to platform work, which Deliveroo believes could provide welcome clarity on the tests to determine the status of platform workers; Deliveroo is contributing to the consultation process.

At any given time, Deliveroo will be involved in regulatory investigations, audits, claims, court cases and appeals, as well as individual and collective legal claims in any market. Deliveroo will continue to disclose developments in relation to rider matters that management considers to be material in the context of both the relevant country and the business as a whole.

5. Outlook and Guidance

A key focus for Deliveroo in 2022 and beyond is making progress on the Company's longer term path to profitability. Deliveroo was profitable on an adjusted EBITDA* basis in H2 2020. In 2021, unit economics were impacted by two factors: a reversal of the benefits seen from higher basket sizes during COVID-related lockdowns; and increased investment in order to capture growth opportunities. From 2022 onwards, Deliveroo expects its adjusted EBITDA margin (as % of GTV)* to improve, driven by expansion of gross profit margin (as % of GTV)* and reduction of marketing and overheads (as % of GTV)*.

In 2022 and beyond, the European consumer will face some headwinds. Consumer price indices are expected to be high for some period of time. Inflationary pressures have been building in recent months; this has been exacerbated by the grave crisis in Ukraine, and the broader geopolitical and economic impacts of this crisis are only just beginning to be felt. Coupled with interest rate rises, consumers will be operating under a different spending environment in the quarters ahead. How this impacts consumer staples and discretionary categories, and where delivery of restaurant food and groceries fits into that environment, is not clear yet.

An inflationary environment will also impact the other sides of Deliveroo's marketplace. Restaurant and grocery partners will face challenges from rising costs across a range of inputs, including food, fuel and labour. Higher fuel prices will also affect many riders, despite the vast majority of orders being delivered on two-wheel vehicles. Deliveroo will monitor all of these impacts closely and ensure that consumer pricing adequately reflects this reality. 

After operating against the backdrop of COVID-19 for an extended period, many markets have now been out of full lockdown restrictions for about a year. Management believes that COVID was a catalyst to accelerate the existing trend of adoption in the online food delivery category. It is encouraging that consumers remained engaged through 2021 even after the removal of lockdown restrictions, but it is still early to determine how cohorts acquired during COVID times will behave over the long term. Furthermore, new user acquisition is expected to be more difficult and costly than during COVID times.

Deliveroo is committed to continuing to drive sustainable growth and strengthen the levers of profitability. Expectations for 2022 reflect caution on the factors outlined above, but management is confident in the Company's ability to adapt financially to a rapidly changing macroeconomic environment and provides the following financial guidance:

●    2022 GTV* growth: expected to be in the range of 15-25% (in constant currency*), with higher growth rate in H2 than in H1, given tough comparison base in H1 (and especially Q1) as last year's COVID restrictions are lapped;

●    2022 adjusted EBITDA*: expected to be in the range of (1.5)-(1.8)% as a % of GTV*; this is an improvement against (2.0)% for FY 2021 and (3.2)% for H2 2021;

●    Medium-term: GTV* growth expectations maintained in the range of 20-25% p.a. (in constant currency*); Deliveroo aims to reach adjusted EBITDA* breakeven at some point during H2 2023-H1 2024, the next key milestone on the path to achieving its longer-term profit ambitions;

●    Longer-term: Deliveroo aims to reach an adjusted EBITDA margin (as % of GTV)* of 4%+ by 2026, with further upside potential beyond 2026, driven by an expansion of gross profit margin (as % of GTV)* and reduction of marketing and overheads (as % of GTV)* .

Exhibit 1: path to profitability

Please click here for path to profitability chart
http://www.rns-pdf.londonstockexchange.com/rns/1106F_1-2022-3-17.pdf

Exhibit 2: profitability levers and illustrative impact

Please click here for profitability levers chart
http://www.rns-pdf.londonstockexchange.com/rns/1106F_1-2022-3-17.pdf

Financial Review^[3]

Income Statement (see page 17)

Revenue

Revenue was £1,824.4 million in 2021 compared to £1,163.0 million in 2020, an increase of 57% or £661.4 million. The increase in revenue was primarily the result of increased orders, driven by growth in monthly active consumers. 

Cost of sales

Cost of sales increased to £1,327.1 million in 2021 from £815.3 million in 2020, an increase of 63% or £511.8 million. This increase was driven by higher aggregate rider costs as a result of increased orders, and reflects a year-on-year decline in the rider cost per order as operational efficiency continued to improve.

Administrative expenses

Administrative expenses were £785.9 million in 2021 compared to £548.0 million in 2020, an increase of 43% or
£237.9 million. This increase was primarily due to higher sales and marketing costs and an increase in staff costs. 

Other operating income

Other operating income was £3.1 million in 2021 compared to £4.0 million in 2020, a decrease of 23% or £0.9 million. The decrease was primarily due to a reduction in relief grants introduced in 2020 as a consequence of the impact of COVID-19 on the food industry.

Other operating expenses

Other operating expenses were £18.8 million in 2021 compared to £12.5 million in 2020, an increase of 50% or
£6.3 million. This was due to increased spend on rider kit during the period as overall delivery volume increased; this was not offset by income from the sale of rider kit, since the Company typically absorbs the majority of the cost of riders' equipment and clothing.

Finance income

Finance income was £7.3 million in 2021 compared to £0.9 million in 2020, an increase of £6.4 million. This increase was primarily due to an increase in unrealised foreign exchange gains.

Finance costs

Finance costs were £1.2 million in 2021 compared to £4.7 million in 2020, a decrease of £3.5 million. This decrease was primarily due to a decrease in unrealised foreign exchange losses.

Income tax

Income tax charge was £5.5 million in 2021 compared to a credit of £4.2 million in 2020. This movement is primarily due to an increased recognition of deferred tax in 2020 and an additional current tax charge in 2021 due to increased taxable profits in certain overseas markets.

Loss for the period

Loss for the period was £303.7 million in 2021 compared to £208.4 million in 2020, as a result of the movements described above.

Alternative Performance Measures

To supplement performance assessment, Deliveroo uses Alternative Performance Measures ('APMs'), which are not defined under IFRS.

Gross transaction value*

Gross transaction value* (GTV*) is a widely used measure for understanding the total value spent by consumers on the marketplace. GTV* was £6,631.0 million in 2021 compared to £3,978.8 million in 2020, an increase of 67% (70% in constant currency*).

Gross profit margin (as % of GTV)*

Gross profit margin (as % of GTV*) is considered a measure of profitability at a transactional level. The gross profit margin (as % of GTV)* was 7.5% in 2021 compared to 8.7% in 2020.

Marketing and overheads*

Management believes that Deliveroo's business model can have a high degree of operating leverage on its fixed cost base over time. For the purposes of assessing and managing performance, the fixed cost base has been split into two major categories: marketing and overheads. Marketing and overheads* were £628.7 million in 2021, compared to £358.5 million in 2020, an increase of £270.2 million or 75%.

Adjusted EBITDA*

Adjusted EBITDA* is considered to be a measure of the underlying trading performance of the business. It is used, amongst other measures, to evaluate operations from a profitability perspective, to develop budgets, and to measure performance against those budgets. Adjusted EBITDA* was £(131.4) million in 2021 compared to £(10.8) million in 2020. The movement of £120.6 million was the result of increased aggregate gross profit* being more than offset by increased investments in marketing and overheads* to support future growth. Adjusted EBITDA margin (as % of GTV)* was (2.0)% in 2021, compared to (0.3)% in 2020; adjusted EBITDA margin (as % of GTV)* was (0.8)% in H1 2021 and (3.2)% in H2 2021.

* Alternative Performance Measure (APM), refer to glossary on pages 40 to 41 for further details

Cash Flow Statement (see page 20)

Cash flows from operating activities

Net cash outflow from operating activities was £(167.7) million in 2021 compared to a net cash inflow of £7.4 million in 2020. The increase in net cash outflow from operating activities was primarily driven by the £120.6 million increase in adjusted EBITDA* loss in 2021, as well as a lower working capital inflow in the year.

Within 2021, there was a net cash inflow from operating activities of £134.0 million in H1 2021 and a net cash outflow of £(301.7) million in H2 2021. This difference was mainly attributable to the following factors: (1) the adjusted EBITDA* loss was £(25.7) million in H1 2021, increasing to £(105.7) million in H2 2021; (2) in H1 2021, cash flows from operating activities benefited from an increase in payables of £132.1 million related to the timing of employee tax and social security payments on share options exercised on IPO, which reversed in H2 2021; (3) H1 2021 benefited from a more favourable timing of the period-end cut off than in H2 2021, meaning that Deliveroo held a higher amount of payables due to restaurants at 30 June 2021 (£104.4 million) than at 31 December 2021 (£62.8 million).

Cash flows used in investing activities

Net cash flows used in investing activities were £58.4 million in 2021 compared to £25.4 million in 2020, an increase of £33.0 million. Purchases of property, plant and equipment increased to £21.4 million in 2021 from £5.8 million in 2020 mainly related to the rollout of Editions delivery-only kitchens. Investment in capitalised development costs increased to £34.6 million in 2021 from £20.5 million in 2020 in connection with the growth of the technology team and associated development work undertaken across our platform. This includes investing in assets that: (1) drive direct financial benefits, through revenue generation (e.g. advertising platforms) or cost reduction (e.g. self-serve capabilities for consumers, partners and riders); (2) provide the enabling technology for particular businesses (e.g. for Deliveroo Hop delivery-only stores); and (3) provide supporting infrastructure for scaling the business efficiently (e.g. platform stability, forecasting models for consumer demand and rider supply).

Cash flows from financing activities

Net cash inflow from financing activities was £1,139.0 million in 2021 compared to a net cash inflow of £167.1 million in 2020. The strong cash inflow was primarily due to £1,011.7 million net proceeds (after costs) from the IPO in April 2021, as well as £135.3 million net proceeds (after costs) from the Series H fundraising round in January 2021.

Balance Sheet (see page 18)

Following the successful completion of fundraising activities in H1 2021, Deliveroo had a strong financial position at the end of 2021. Cash and cash equivalents were £1,290.9 million at 31 December 2021, compared to £1,626.7 million at 30 June 2021 and £379.1 million at 31 December 2020. As at 31 December 2021, Deliveroo had no debt outstanding. The Company has £75 million and €87.5 million of available loan finance in the form of a Revolving Credit Facility ("RCF"), none of which has been drawn down.

Provisions at 31 December 2021 were £81.7 million, a reduction of £30.5 million compared to £112.2 million at 31 December 2020. This reduction is principally related to a release of £21.9 million to accruals for settlements reached with labour inspectors (which is expected to be paid in H1 2022), and the utilisation of provisions of £11.4 million as a related payment to the tax office in an overseas jurisdiction. These have been offset by the recognition of further provisions for legal, regulatory and contractual matters, principally in some of the Group's overseas territories.

Total equity was £1,073.7 million at 31 December 2021, compared to £175.1 million at 31 December 2020. This movement primarily reflects the issue of share capital in the year of £1,150.2 million partially offset by the total comprehensive loss for the year of £317.0 million.

Dividend and Dividend Policy

No dividend has been declared or paid in the current or comparative periods. Given the early stage of maturity of the online food category, Deliveroo remains focused on investing to maximise long-term free cash flow per share, believing that this is the best way to drive long-term shareholder value. The dividend policy will be reviewed on an ongoing basis, but the Company does not expect to declare or pay any dividends for the foreseeable future.
 

Consolidated Income Statement and Statement of Comprehensive Income

For the year ended 31 December 2021

*Results for the year ended 31 December 2020 have been restated to reflect the reclassification of Roofoods Spain, S.L. as a discontinued operation.

This statement should be read in conjunction with the notes to the consolidated financial statements on pages 21 to 39.