Deliveroo PLC (LSE:ROO) has halved its sales guidance for 2022, adopting a “more cautious economic outlook” in the face of restricted consumer spending.
The decision follows a slowdown in transaction growth during the second quarter, in which the company said it was hit by the impact of “increased consumer headwinds” amid rising inflation and a cost-of-living crisis.
The driver delivery service now expects to generate gross transaction value growth of 4% to 12% this year, compared to an earlier guidance of 15% to 25%.
Deliveroo is considered to be a unicorn of the gig economy, last raising US$180 million in late-stage funding, valuing the business at over US$7bn, in January 2021.
Last year, the Central Arbitration Committee rejected a plea on behalf of its drivers to be unionised on grounds that they were not employed workers, but self-employed.
The company maintained its underlying earnings margin guidance for the year and said its balance sheet remained “strong”.
“Management is confident in the company's ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control,” Deliveroo said in a trading update today.
Deliveroo transacted £3.56bn of rides in the first half of 2022, a 7% uptick compared to a year earlier, as growth fell from double digits in the first quarter of the year to 4% in the recent quarter.
The UK and Ireland experienced the biggest volume of growth during the period, of 8%, compared to 6% internationally, it said.
Deliveroo reported double-digit growth in the first quarter of the year across its main market of the UK and Ireland, and internationally.
However, that growth slumped in the second quarter, when it posted growth of just 4% and 1% in those regions. The results did not include its discontinued operations in Spain.
“This is a slowdown in GTV [gross transaction value] growth compared to Q1 2022, which management believes reflects the impact of increased consumer headwinds during Q2,” the company said.
It said the value of its orders “reduced slightly year-on-year, as basket sizes were elevated during lockdowns” last year.
The driver delivery service is due to publish its half-year results on 10 August.