Strong growth and continued strategic progress in H1 2021

Operational and Strategic Highlights          

●    Growth materially ahead of expectations in H1 2021; consumer engagement post-reopening has been encouraging, with orders and average order value* (AOV) proving resilient despite restrictions easing

●    Deliveroo now has the most food merchants in the UK of all delivery platforms after adding further selection; UK expansion is ahead of plan with 72% population coverage at end-June vs initial target of 67% by year-end

●    Further traction in on-demand grocery (ODG) supported by roll-out of offering with leading partners; ODG has attractive standalone unit economics and significant synergies with restaurants business

●    Strong rider satisfaction with 85% of riders globally saying they are satisfied or very satisfied working with Deliveroo; rider attraction and retention rates remain high despite rising job vacancies across economies

●    Continued investment in long-term differentiation of the consumer value proposition and in growing the monthly active consumer base, given clear evidence of a positive structural shift in consumer behaviour, and strong capital position following the IPO in March 2021

●    Proposal to end operations in Spain announced on 30 July 2021, as achieving a top-tier market position would require a disproportionate level of investment with highly uncertain long-term potential returns

●    Launch of 'Full Life' campaign, which builds on Deliveroo's support for the NHS with a new commitment to work with restaurant and grocery partners to deliver one million meals to communities in need by early next year

Financial Overview^[1]

●    Gross Transaction Value (GTV)* up 102% to £3,385.8 million; GTV* growth was 131% in Q1 and 81% in Q2 2021, showing continued strength despite reopening effects and an increasingly tough comparison base

●    UK & Ireland GTV* up 110% in H1 2021, with broad-based geographic momentum and no material impact from UK reopening milestones during Q2 2021

●    International GTV* up 95% in H1 2021, reflecting differing patterns of reopening in H1 2021 and varying impact of lockdown restrictions in the comparison base

●    Revenues up 82% to £922.5 million, primarily due to increase in GTV*, driven by an increase in monthly active consumers compared to H1 2020

●    Gross Profit up 75% to £263.9 million; gross profit margin (as % of GTV)* of 7.8%, down from 8.8% in H1 2020 due to accelerated investments to support future growth, including consumer acquisition and retention, and differentiated restaurant and grocery selection

●    Adjusted EBITDA* was a loss of £(27.0) million compared to £(30.3) million in H1 2020, as higher gross profit was largely offset by increased investments to support future growth

●    Statutory loss before tax improved to £(104.8) million in H1 2021 compared to £(128.4) million in H1 2020

●    Cash and cash equivalents of £1,626.7 million at 30 June 2021 included £1,012.9 million net proceeds (after costs) from the IPO in March 2021

Outlook & Full Year Guidance

●    Deliveroo reiterates upgraded full year guidance provided in the Q2 2021 trading update on 8 July 2021:

○    Full year GTV* growth of 50-60% (this was increased on 8 July 2021 from prior guidance of 30-40%)

○    Full year gross profit margin (as % of GTV)* in the lower half of the range of 7.5-8.0%, reflecting accelerated growth investments and the continued expectation that AOV* reverts towards pre-pandemic levels in H2 2021.

Will Shu, Founder and CEO of Deliveroo, said:

"We have reported strong performance in the first half of the year and continued to make good progress in executing our strategy. As a result, I believe that we are well positioned to take advantage of the huge opportunity ahead.

"We are seeing strong growth and engagement across our marketplace as lockdowns continue to ease. Demand has been high amongst consumers. We have widened our consumer base, seen people continuing to order frequently and we now work with more food merchants than any other platform in the UK. At the same time, more riders are choosing to continue to work with the company because they value the work we offer.

"As reflected in our guidance, whilst we expect that consumer behaviour may moderate later in the year, we remain excited about the opportunity ahead and our ability to capitalise on it."

Summary Financial Information

* Alternative Performance Measure (APM), refer to glossary on page 37 for further details
 GTV change in constant currency was 102% for Group, 110% for UK & Ireland, and 95% for International

Analyst and investor call

A conference call and webcast with Q&A for analysts and investors will be held at 09:30 BST / 10:30 CEST. Participants can register for the conference call at https://secure.emincote.com/client/deliveroo/hy-2021/vip_connect and the webcast link is https://secure.emincote.com/client/deliveroo/hy-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 - 07966 930716 or 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 on a mission to build the definitive online food company. We want to be the platform that people turn to whenever they think about food. Further information regarding Deliveroo is available on the Company's website at https://corporate.deliveroo.co.uk/.

Additional Notes

1. All figures in this trading update are unaudited

2. All growth rates reflect a comparison to the six-month period ended 30 June 2020 unless otherwise stated

3. References to "Q1" are to the three-month period ended 31 March 2021, unless otherwise stated. References to "Q2" are to the three-month period ended 30 June 2021, unless otherwise stated. References to the "year", "financial year" or "2021 financial year" are to the financial year ending 31 December 2021 and references to the "last year", "last financial year" or "2020 financial year" are to the financial year ended 31 December 2020 unless otherwise stated

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^[2]

1. Overview

Deliveroo's mission is to be the definitive online food company - providing consumers with access to the food they love for each of the 21 weekly meal occasions. The Company aims to achieve this by a relentless focus on offering the best value proposition to all three sides of the marketplace: consumers, restaurant and grocery partners, and riders. Deliveroo has a broad geographic footprint, but evaluates its value proposition through a hyperlocal lens on a neighbourhood-by-neighbourhood basis. The Company has a strong culture of innovation, and the business is underpinned by pioneering logistics technology. In recent years, Deliveroo has launched and begun to scale several category-defining initiatives: Plus (a subscription programme that unlocks unlimited free delivery), Editions (delivery-only kitchens), Signature (a full stack white label solution for restaurant partners), and on-demand grocery. Deliveroo's strategy aims to balance ambitious growth objectives with a focus on being the most efficient logistics operator with best-in-class unit economics over the long term.

The online food industry is still at an early stage of maturity. Deliveroo is laying the foundations now to drive long-term value for its stakeholders. The Company invests in durable, long-term differentiation viewed through the lens of a hyperlocal consumer value proposition - the five pillars of availability, selection, experience, value and brand. Examples of investments include: increased selection to create differentiated content for consumers; expansion into new geographic areas; brand-building to drive up awareness of the category and of Deliveroo's offering; and new consumers that will significantly increase their engagement over a succession of future periods. These investments are made with a view to driving sustainable long-term value, and the primary impact of many of the investments will be in future quarters and years, rather than in-period.

During most of 2020, the Company 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 has been much better positioned to increase investment, with a strong capital position following the conclusion of the CMA investigation in Q3 2020, the Series H fundraising round in January 2021 and the IPO at the end of March 2021. Deliveroo also now has strong conviction that the pandemic has accelerated the secular shift in consumer behaviour, moving demand in food online.

2. Group Performance Highlights

Overall, the Company delivered a strong operating performance in H1 2021. Growth in both monthly active consumers and orders continued to be healthy, up 88% and 100%, respectively. As a result, gross transaction value (GTV)* increased to £3,385.8 million, up 99% (102% in constant currency). Revenue was £922.5 million, and gross profit was £263.9 million. The gross profit margin (as % of GTV)* was 7.8% in H1 2021 compared to 8.8% in H1 2020, with the year-on-year movement primarily attributable to 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. Adjusted EBITDA* was £(27.0) million, broadly flat compared to H1 2020, as increased gross profit was largely offset by increased investments to support future growth. These investments include marketing spend to drive consumer brand awareness, and adding technology talent to further develop the Deliveroo platform.

The following commentary primarily focuses on alternative performance measures such gross transaction value (GTV)*, gross profit margin (as % of GTV)* and adjusted EBITDA as these are the principal metrics the business uses to monitor and assess performance.

* Alternative Performance Measure (APM), refer to glossary on page 37 for further details
 Group GTV change in constant currency was 102% in H1 2021

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 H1 2021, the UKI segment represented 52% of total GTV*. Deliveroo operates in over 200 towns and cities across the UK & Ireland.

* Alternative Performance Measure (APM), refer to glossary on page 37 for further details
UK & Ireland GTV change in constant currency was 110% in H1 2021

In UKI, GTV* grew to £1,773.3 million in H1 2021, an increase of 110%. GTV* growth was 142% in Q1 2021 and 87% in Q2 2021, both in constant currency. This lower growth rate in Q2 2021 reflects a much tougher comparison base in the second quarter; taking a 2-year view, GTV* was up 208% in Q1 2021 and 212% in Q2 2021, compared to the respective quarters in 2019. In H1 2021, orders and average order value* (AOV) performed ahead of expectations, as engagement remained high despite the progressive easing of restrictions in the UK.

During the period, Deliveroo continued to add differentiated content for consumers. UKI restaurant selection was further expanded, and in Q2 2021 alone the Company added c.10,000 new sites, increasing the base of restaurants by almost 30%. This means that Deliveroo now has the largest number of active food merchants in the UK of all food delivery platforms. The Company also continued to roll out its grocery offering: at the end of the period, Deliveroo had c.1,800 grocery sites live with major partners in the UK (up from c.1,200 at the end of 2020), and more than 4,600 grocery sites in total when also including smaller independent partners.

Alongside achieving strong growth in H1 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 is well ahead of the original target, with 72% coverage of the UK population achieved at the end of June.

UKI revenue grew 95% to £480.6 million in H1 2021, primarily due to the increase in GTV*. Gross profit was £166.1 million in H1 2021 compared to £93.7 million in H1 2020, an increase of 77%. Gross profit margin (as % of GTV)* was 9.4% compared to 11.1% in H1 2020. This decrease was primarily driven by accelerated investments to support future growth, through consumer acquisition and retention and through increased restaurant and grocery selection. Adjusted EBITDA* was £55 million in H1 2021, compared to £34.5 million in H1 2020, as increased gross profit was partially offset by continued investments in growth, including brand-building marketing and headcount additions.

International

In H1 2021, the International segment represented 48% of total GTV*. Deliveroo's international segment comprises 10 markets across Europe, the Middle East and Asia Pacific.

* Alternative Performance Measure (APM), refer to glossary on page 37 for further details
International GTV change in constant currency was 95% in H1 2021

In International, GTV* grew to £1,612.5 million in H1 2021, an increase of 95% in constant currency. GTV* growth was 121% in Q1 2021 and 75% in Q2 2021, both in constant currency. This lower growth rate in Q2 2021 partly reflects a tougher comparison base in the second quarter; taking a 2-year view, GTV* was up 183% in Q1 2021 and 166% in Q2 2021, compared to the respective quarters in 2019, both in constant currency.

In H1 2021, growth rates within the International segment's constituent markets reflected differing patterns of reopening, along with the varying impact of lockdown restrictions in the comparison base. Deliveroo's markets in Asia were first to experience national lockdowns and the first to reopen following the lifting of restrictions. In parts of the Middle East, restrictions were also lifted relatively early. In these markets, consumer engagement and acquisition continues to be strong despite lockdown restrictions easing. In Deliveroo's markets in Europe, the lifting of restrictions has been fairly recent. In parts of Europe, there has been some evidence of a small-to-moderate impact on consumer engagement from reopening, although the moderation in sequential growth is difficult to separate from the historical seasonal patterns - restriction easings in Europe have come at the same time as the beginning of the summer period. 

Across the International segment, growth in H1 2021 was supported by strengthened relationships with restaurant partners, especially in France, Hong Kong and UAE. During the period, the Company also continued to roll out its grocery offering: at the end of the period, Deliveroo had c.900 grocery sites live with major partners across International markets (up from c.400 at the end of 2020), and more than 4,400 sites in total when also including smaller independent grocery partners.

Revenue for International grew 69% to £441.9 million in H1 2021, primarily due to the increase in GTV. Gross profit was £97.8 million in H1 2021 compared to £56.9 million in H1 2020, an increase of 72%. Gross profit margin (as % of GTV)* was 6.1% compared to 6.6% in H1 2020. This decrease was primarily driven by accelerated investments to support future growth, through consumer acquisition and retention and through increased restaurant and grocery selection. Adjusted EBITDA* was £(10.5) million in H1 2021, compared to £(8.1) million in H1 2020, as increased gross profit was offset by continued investments in growth.

After the end of the period under review, Deliveroo announced on 30 July 2021 that it proposes to consult on ending its operations in Spain. Spain represented less than 2% of the Company's total GTV in H1 2021. Deliveroo has 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 proposal to end operations in Spain reflects the intention to focus investment and resources on the Company's other markets. Deliveroo's proposal regarding its operations in Spain remains subject to full consultation with impacted employees and riders.

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 H1 2021, Deliveroo made further progress in developing all three sides of the marketplace.

Consumers

Deliveroo's consumer base has consistently increased, reaching an average of 7.8 million monthly active consumers in Q2 2021. This is a more than two-fold increase from the 3.7 million monthly active consumers in Q1 2020.

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 H1 2021, despite lockdown restrictions easing. For example, consumers in the UK January 2018 cohort had a monthly average order frequency of 3.1x in June 2019, 3.5x in June 2020 and 3.9x in June 2021.

The strong growth in monthly active consumers and the increased order frequency reflects the continued strengthening of the consumer value proposition. An important part of this is Deliveroo Plus, the subscription programme that unlocks unlimited free delivery to consumers for a fixed monthly fee. Plus removes delivery fees as a barrier to ordering, increasing order frequency and improving retention. From December 2020 to June 2021, Plus penetration increased further as the paying subscriber base grew by 33%, in part driven by a new more affordable Plus Lite offering.

Restaurants and On-demand Grocery

Deliveroo works with c.137,000 restaurant partner sites as of the end of H1 2021. Growth in restaurant selection increases availability and choice to consumers on a neighbourhood by neighbourhood basis, and in the UK Deliveroo now has more active food merchants than any other food delivery platform. As well as bringing partners' existing restaurant sites onto the platform, Deliveroo has continued to develop Editions: delivery-only kitchens that offer restaurant partners an opportunity to bring their brands to new locations. During H1 2021, Deliveroo has further developed the Editions concept and continued to build a pipeline of sites to bring the best, exclusive restaurant content to a wider range of consumers.

Deliveroo also continues to rapidly develop its on-demand grocery offering. In H1 2021, on-demand grocery represented 7% of total GTV*, with growth driven by the expansion of key partnerships. In the UK, Deliveroo now has c.1,800 grocery sites live with major partners, and more than 9,000 sites in total when also including smaller independent partners. Coverage has reached 70% of the UK population with major grocery partners, including Waitrose, Co-op, Morrisons, Sainsbury's and Aldi, up from 36% at the end of Q1 2020. In International, Deliveroo now has c.900 sites live with major brands, compared to c.400 at the end of 2020. This has been driven by continued rollout with key grocery partners, such as Carrefour in France, Italy, Belgium, Casino in France, and Park N Shop in Hong Kong.

The on-demand grocery offering provides powerful synergies to the core platform, representing almost 100% incremental demand to the restaurant channel and providing an effective customer acquisition channel. Unit economics for grocery are already attractive, with potential for further improvements. For example, in the UK & Ireland gross profit per order for grocery stands at approximately £2.10 (compared to £2.40 for restaurants), with scope to increase further by driving higher basket sizes, improving selection and inventory management, and by adding non-commission revenue from FMCG or CPG companies as advertising spend in the category moves online.

Riders

Riders value the flexible work Deliveroo offers. This enables riders to set their own work patterns without having to plan ahead, select which orders to complete 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. Continued strong rider application pipelines and rider retention rates as lockdowns have eased are further evidence of riders valuing self-employed work. In the UK, 90% of riders working in May or June were still working with the company in July, even as employment vacancies increased in the wider economy, in particular in retail and hospitality.

As previously mentioned in the IPO prospectus, the independent contractor status of riders, which applies in most of the jurisdictions in which Deliveroo operates, has been and continues to be the subject of challenge in certain markets. At any given time, Deliveroo will be involved in regulatory investigations, audits and/or claims as well as individual and collective legal claims in any market.  In H1 2021, there were the following material developments in respect of rider status matters: 

●    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 also confirmed in April that Deliveroo offers self-employed work;

●    In Spain, legislation to classify platform workers in the delivery sector as employees was passed and will come into effect on 12 August 2021. As noted above, the Company has already proposed to end its operations in Spain;

●    In Italy, following the industry-wide reclassification issued in February 2021, the investigation into certain of Deliveroo's historical models by Italian labour, social security, national insurance and health and safety authorities is still ongoing.

Deliveroo will continue to disclose any 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. Other Strategic Developments

Investing in Technology

Deliveroo's business is underpinned by logistics technology that ensures all three sides of the marketplace interact seamlessly together. The Company leverages machine learning models and algorithms to deliver high-quality user experiences and operational efficiencies. Consistent improvements in technology reinforce the Deliveroo flywheel, driving incremental gains in efficiency and quality of service as the business grows.

Operating an on-demand, three-sided marketplace presents challenges that can attract leading product and engineering talent. On 10 August 2021, Deliveroo appointed Devesh Mishra as Chief Product and Technology Officer. Devesh joins from Amazon, where he has held a number of senior roles over the past 16 years. Most recently, he has been Vice President, Global Supply Chain at Amazon, managing a multi-billion dollar inventory and overseeing a supply chain spanning 185 markets. Devesh led a team of several thousand engineers, data scientists and product managers that built and operated the world's most technologically advanced supply chain, using data analytics, predictive technology and machine learning to scale Amazon's retail and marketplace business.

At Deliveroo, Devesh will be responsible for the growing technology organisation, including engineering, data science, design and product development. In July 2021, Deliveroo announced that it is creating 400 high-skilled tech jobs across a range of skill sets including software engineers, designers, and data scientists. These new colleagues will work to ensure that Deliveroo provides each side of the marketplace with unique, personalised experiences, to help restaurants and grocers to grow, riders to pursue the flexible work they want, and consumers to enjoy the best user experience possible.

'Full Life' Campaign

As a hyper-local business, Deliveroo aims to use its unique network of consumers, restaurants and grocers, and  riders to play a positive role in supporting the communities in which it operates. Building on the company's support for the NHS, Deliveroo is now working with partners with an ambition to deliver one million meals to communities in need. Across all markets Deliveroo is working with charities and other groups to help vulnerable groups access food as the Full Life campaign is rolled out internationally.

6. Outlook and Full Year Guidance

Post-pandemic performance

Overall, growth in H1 2021 was materially ahead of expectations. Consumer engagement has been encouraging despite restrictions easing, which demonstrates a continuation of the change in consumer habits that has been accelerated during the pandemic. In recent months, Deliveroo has not seen a material impact on orders and average order value in UK & Ireland despite restaurants reopening. In International, consumer engagement trends have also proved mostly resilient. In parts of Europe, there has been some evidence of a small to moderate impact from reopening, although the moderation in sequential growth is difficult to separate from the seasonal patterns at the beginning of the summer period.

Management's outlook for the remainder of the year continues to be optimistic but prudent, combining confidence in continued year-on-year growth in orders with an expectation that average order values revert towards pre-pandemic levels.

Full Year Guidance

●    Deliveroo reiterates upgraded full year guidance provided in the Q2 2021 trading update on 8 July 2021:

○    Full year GTV* growth of 50-60% (this was increased on 8 July 2021 from prior guidance of 30-40%)

○    Full year gross profit margin (as % of GTV)* in the lower half of the range of 7.5-8.0%, reflecting accelerated growth investments and the continued expectation that AOV* reverts towards pre-pandemic levels in H2 2021.

Financial Review^[3]

Profit and Loss

Revenue

Revenue was £922.5 million in H1 2021 compared to £507.4 million in H1 2020, an increase of 82% or £415.1 million. This increase was primarily the result of increased orders, driven by growth in monthly active consumers. 

Cost of Sales

Cost of sales increased to £658.6 million in H1 2021 from £356.8 million in H1 2020, an increase of 85% or £301.8 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.

Other operating income

Other operating income was £1.2 million in H1 2021 compared to £2.7 million in H1 2020, a decrease of 56% or £1.5 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.

Administrative expenses

Administrative expenses were £364.2 million in H1 2021 compared to £275.6 million in H1 2020, an increase of 32% or £88.6 million. This increase was primarily due to higher sales and marketing costs. 

Other operating expenses

Other operating expenses were £8.1 million in H1 2021 compared to £4.8 million in H1 2020, an increase of 69% or £3.3 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 absorbs the majority of the cost of riders' equipment and clothing.

Finance income

Finance income was £3.0 million in H1 2021 compared to £0.8 million in H1 2020, an increase of 275% or £2.2 million. This increase was primarily due to an increase in interest received from bank deposits following the successful completion of the IPO in March 2021.

Finance costs

Finance costs were £0.6 million in H1 2021 compared to £2.1 million in H1 2020, a decrease of 71% or £1.5 million. This decrease was primarily due to a decrease in unrealised foreign exchange losses, along with a decrease in interest expense on other short term finance.

Income tax

Income tax expense was £3.9 million in H1 2021 compared to a credit of £2.2 million in H1 2020. This movement was primarily due to an increase in overseas taxable profits.

Loss for the period

Loss for the period was £108.7 million in H1 2021 compared to £126.2 million, as a result of the movements described above.

Alternative Performance Measures*

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 £3,385.8 million in H1 2021 compared to £1,704.0 in H1 2020, an increase of 99% (102% in constant currency). This increase was primarily the result of increased orders, driven by growth in monthly active consumers.

Gross profit margin (as % of GTV)*

Gross profit margin (as % of GTV)* is considered a good measure of profitability at a transactional level. The gross profit margin (as % of GTV)* was 7.8% in H1 2021 compared to 8.8% in H1 2020, with the year-on-year movement primarily attributable to 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.

Marketing and overheads*

Management believes that Deliveroo's business model has a high degree of operating leverage on its fixed cost base. For the purposes of assessing and managing performance, the fixed cost base has been split into two major categories: marketing and overheads. Marketing costs are a combination of both brand-building activities and activities focused on in-period acquisition. Overheads consist of staff costs, the non-capitalised portion of costs relating to information technology, and other administrative expenses. Marketing and overheads were £290.9 million in H1 2021, compared to £180.9 million in H1 2020, an increase of £110.0 million or 61%. This movement was driven in part by an increase in marketing spend to drive consumer brand awareness, and the addition of technology talent to further develop the Deliveroo platform.

Adjusted EBITDA*

Adjusted EBITDA* is considered to reflect the underlying trading performance of the business and is used, amongst other measures, to evaluate operations from a profitability perspective. Adjusted EBITDA* was £(27.0) million in H1 2021 compared to £(30.3) million in H1 2020. The movement of £3.3 million was the result of increased gross profit being largely offset by investments in marketing and overheads to support future growth.

* Alternative Performance Measure (APM), refer to glossary on page 37 for further details

Cash Flow

Cash flows from operating activities

Net cash inflow from operating activities was £134.0 million in H1 2021 compared to a net cash outflow of £4.5 million in H1 2020. In H1 2021, cash flows from operating activities included 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 unwinds in H2 2021. Excluding this increase in payables, the year-on-year improvement in net cash flows from operating activities was primarily driven by the £19.9 million decrease in operating loss in the period.

Cash flows used in investing activities

Net cash flows used in investing activities were £24.6 million in H1 2021 compared to £15.0 million in H1 2020, an increase of £9.6 million. This was primarily due to increased investment in capitalised development costs in connection with the growth of the technology team, and an increase in purchases of property, plant and equipment mainly related to the rollout of Editions delivery-only kitchens.

Cash flows from financing activities

Net cash inflow from financing activities was £1,143.4 million in H1 2021 compared to a net cash outflow of £5.7 million in H1 2020. The strong cash inflow was primarily due to £1,012.9 million net proceeds (after costs) from the IPO in March 2021, as well as £135.3 million net proceeds (after costs) from the Series H fundraising round in January 2021.

Financial Position

Following the successful completion of fundraising activities in H1 2021, Deliveroo had a strong financial position at the end of H1 2021. Cash and cash equivalents were £1,626.7 million at 30 June 2021 compared to £215.6 million at 30 June 2020.

Dividend and Dividend Policy

No interim 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 drive growth, 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.

Events After the Reporting Period

Deliveroo announced on 30 July 2021 that it proposes to consult on ending its operations in Spain. Deliveroo has 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's proposal to consult on the ending of its operations in Spain remains subject to full consultation with impacted employees and riders. Deliveroo anticipates that the collective consultation process will commence in early-September and the Company will work with all relevant stakeholders and prepare all required documentation accordingly. Should the Company decide to end operations after the conclusion of the consultation process, which will take around a month, the Company will make sure that appropriate compensation and goodwill packages, compliant with all local regulations and laws, will be available for riders and employees.

Going concern

The Group's loss for the period amounted to £108.7 million (6 months ended 30 June 2020: £126.2 million). The Group had net assets of £1,232.9 million as at 30 June 2021 (30 June 2020: net liabilities of £140.4 million), including cash and cash equivalents of £1,626.7 million at 30 June 2021 compared to £215.6 million at 30 June 2020.  As at 30 June 2021, the Group also had £75 million and €85 million of available loan finance in the form of a Revolving Credit Facility ("RCF") which has not been drawn down. No associated covenants have been breached, nor are there any forecasted breaches.

In order to assess the going concern basis of preparation, management has prepared a forecast which covers a period in excess of 12 months from the date of signing the interim statement, to 31 December 2022. In preparing these forecasts, management has given due consideration to the impacts of COVID on the business, in respect of order growth and profitability, in case such circumstances should reoccur. Management does not consider that there are any reasonably possible scenarios which would cause the business to have insufficient cash to be considered a going concern at any point during the forecast period, and in assessing this, has calculated the monthly average cash outflow that would result in a negative cash position at the end of the forecast period. The resulting cash outflow would be far in excess of any month forecasted, or incurred historically, and management is satisfied that it is wholly unlikely. Further, there are no current investment plans that would change this view.

With the widespread adoption of COVID vaccines, we consider it unlikely that there will be wholescale country lockdowns, however the business has demonstrated that it is able to adapt to a remote model and management is confident that the business would revert to the successful operating model that has been in effect during periods of lockdown.

As stated in note 2 to the condensed financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Principal risks and uncertainties

The Group faces a number of risks and uncertainties that may have an adverse impact on the Group's operation and performance.  The Directors regularly assess the risks and uncertainties that the Group faces. The Directors do not consider that the principal risks and uncertainties as set out in the Prospectus have changed materially since it was published on 22 March 2021. The principal risks can be found in the Prospectus on pages 8 to 31. These risks are expected to apply for the remaining half of the financial year and are summarised as follows:

●     Three-Sided Marketplace - Our business model relies on a three-sided marketplace and we must continue to acquire and retain consumers, restaurant and grocery partners, and riders to develop our business and achieve profitability

●     Rider Supply and Demand - To provide a high-quality service to our consumers, we require effective operations to maintain a balance between supply and demand for riders in any given area, which we  may not always be able to maintain.

●     Platform Integrity - We depend on our network infrastructure, software, and content delivery processes to operate our platform.  Any significant disruption in service in our platform could prevent us from operating effectively and affect our operations and reputation

●     Rider Model - Our business would be adversely affected if our rider model or approach to rider status and our operating practices were successfully challenged or if changes in law required us to reclassify our riders as employees

●     Key Commercial Relationships - We rely on various national and global brands in each of the markets in which we operate, sometimes on an exclusive basis. The loss of such relationships could adversely affect our business

●     Reputation and Brand - Our reputation, brand and ability to build and retain trust with existing and new participants in our three-sided marketplace may be adversely affected, including by any events beyond our control

●     Reliance on Key Personnel - We rely on our senior management team, and our business may be adversely affected if we cannot retain and motivate key employees

●     Competition - We operate in a highly competitive industry and must compete effectively to succeed, including attracting technology talent to scale our engineering, data science, analyst, and product teams

●     Managing Growth - We are a rapidly growing company and if we do not manage our growth and evolution successfully, or we fail to execute on our strategy, our business will suffer

●     Financial Condition - We have in past periods incurred, and may in future periods incur, net losses, which could affect our ability to access additional capital to grow our business

●     Data Security - We are responsible for all personal data we receive from consumers, partners and riders, and for the confidential information we hold and process, and could face significant reputational and legal consequences as well as financial loss if we fail to protect this information from security risks.

●     Compliance with Laws and Regulations - We are subject to the laws and regulations of numerous national and local authorities and changes to or uncertainty regarding the applicable laws, regulations or regulatory environment may adversely affect our business

●     External Environment and Events - Our business could be affected by the actions of governments, political events or instability, or changes in public policy in the countries in which we operate.

To the members of Deliveroo plc

This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

The IMR contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This interim management report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Deliveroo plc and its subsidiary undertakings when viewed as a whole.

Responsibility statement

We confirm that to the best of our knowledge:

(a)  the condensed set of financial statements has been prepared in accordance with UK-adopted IAS 34 'Interim Financial Reporting';

(b)  The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)  The interim management report includes a fair review of the information required by DTR 4.2.8R disclosure of related parties' transactions and changes therein).

By the order of the Board of Directors,

Adam Miller

Chief Financial Officer

10 August 2021

Condensed consolidated Statement of Profit or Loss

Six months ended 30 June 2021 (unaudited)

All activities derive from continuing operations. This statement should be read in conjunction with the notes to the consolidated financial statements on pages 24 to 36.

Condensed consolidated Statement of Comprehensive Income

Six months ended 30 June 2021 (unaudited)

All activities derive from continuing operations. This statement should be read in conjunction with the notes to the consolidated financial statements on pages 24 to 36.

Condensed consolidated Statement of Financial Position

Six months ended 30 June 2021 (unaudited)

This statement should be read in conjunction with the notes to the consolidated financial statements on pages 24 to 36.