Deliveroo CEO Shu Pins Weak IPO on Volatility, Archegos Fallout

Ivan Levingston
·3 min read

(Bloomberg) -- Deliveroo Plc Chief Executive Officer Will Shu said that market gyrations, a rotation away from technology stocks and the blowup of investment firm Archegos Capital Management contributed to the firm’s disappointing debut on the London Stock Exchange.

“We went public in a really volatile environment, and there’s some things you just can’t control at the end of the day,” Shu said in an interview after the company reported its first quarterly earnings. “The last two weeks also show we have a big job ahead of us to tell our story.”

Shares in the company fell about 1% in trading at 9:02 a.m. London time on Thursday, and are down more than 30% since its initial public offering last month.

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The company reported a 114% gain in orders in the first quarter from a year earlier in a statement on Thursday. It maintained its guidance for a slowdown in transaction volumes for the full year and gross profit margins of 7.5% to 8%, and said it was being prudent “pending further information on consumer behavior post-Covid,” in a statement.“This is our fourth consecutive quarter of accelerating growth, but we are mindful of the uncertain impact of the lifting of COVID-19 restrictions,” Shu said in the statement. “So while we are confident that our value proposition will continue to attract consumers, restaurants, grocers and riders throughout 2021, we are taking a prudent approach to our full year guidance.”In the interview, Shu said that in a couple markets where coronavirus restrictions have been lifted the company has seen continued growth.The value of transactions placed on the app rose 130% to 1.65 billion pounds ($2.3 billion) in the first quarter, the company said. Deliveroo expects that growth to slow to 30% to 40% for the full year as consumers exit pandemic lockdowns.Deliveroo was among the winners of the Covid-19 lockdowns, with transactions on the platform growing 64% in 2020, marking a turnaround from before the outbreak when the company warned it risked collapse.Orders in the U.K. and Ireland grew 121% in the quarter, outpacing international markets as the company acquired new customers in its biggest region.Earlier this week, top competitor Just Eat Takeaway.com NV reported a 79% rise in first-quarter orders and said it was looking into the feasibility of grocery delivery. The U.K. market was its strongest with a 96% increase in total orders.Deliveroo is seeking to rebound from the worst debut in decades for a big U.K. listing. Before the IPO, some institutional investors said they wouldn’t participate over various concerns while riders planned a strike to protest working conditions.

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Shu, a former banker, had a stake worth at least 449 million pounds when the company went public, but found a colder reception in London than he may have expected.The company is planning to expand into 100 new localities across the U.K. this year and reach 4 million more customers, and recently expanded its partnership with supermarket J Sainsbury Plc.

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(Updates with CEO comments throughout)

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