Ahead of Deliveroo PLC (LSE:ROO) results on Thursday its shares have pedalling sideways for almost a year, with its last trading update in January receiving a gentle response to a downgrade on full-year sales guidance.
The last update revealed gross transaction value (GTV) rose 9% year-on-year in the fourth quarter and 9% for the whole of 2022, with the company showed signs of increased market share and better underlying profit margins, leading to breakeven in the second half of the year.
But GTV guidance for 2023 was downgraded to between 4% to 8%, due to concerns about consumer disposable income.
Aping many others in the tech world (ignoring the argument over whether companies that rely on people riding pedal-bikes or mopeds with huge bags strapped to their backs are tech companies), last month the company said it is axing around 9% of its workforce as it attempts to "demonstrate and accelerate a clear path to profits".
With orders falling 2% in the fourth quarter as consumers pulled in their horns, with UK order volumes flat and the international business seeing a 5% drop in Q4, there was also a loss of momentum in monthly active customers, with an average monthly order frequency is stuck at 3.4.
This makes a bit of a mockery, said analysts at AJ Bell, of chief executive Will Shu’s pre-IPO marketing spiel about how Deliveroo was targeting all of the "21 meal occasions a week".
"Given the near-term failure to live up to such hype, and the ongoing losses, Deliveroo’s shares still languish nearly 75% below 2021’s 390p-a-share flotation price," the analysts added.
"Investors have long since tired of the ‘build-and-they-will-come’ strategy, as a customer land grab has generated only losses thanks to a market share war between Deliveroo, Uber Eats and Just Eat Takeaway, let alone restaurant chains with their own delivery services, while hungry consumers still also have the option to eat out or buy food from a supermarket or local store and cook it themselves.
"Deliveroo could yet revive its share price, if it can show profits and cash flow, and it is adjusting to the new reality by retreating from certain markets, such as Spain, the Netherlands and Australia, and focusing on those where its competitive position is stronger."