The acquisition of Hungryhouse is already paying off for Just Eat (JE.) by contributing 1.4m orders in the first quarter of 2018, although competition concerns remain.
Shares in Just Eat fatten 3.7% to 802.4p.
The food delivery platform says UK orders soared 24% to £29.7m as an early Easter holiday added 1% to order growth.
Overall sales are up 49% to £177.4m, driven by strong order growth and higher value delivery orders.
UBS analyst Chris Grundberg says Just Eat’s top end of its previous sales guidance (£600m to £700m) is conservative, arguing this implies sales growth will slow to 22% year-on-year for the remainder of 2018.
WHY ARE JUST EAT’S SHARES UNDER PRESSURE?
Shares in Just Eat have lost 5.1% since it announced a £50m investment in delivery services in April. This is anticipated to drag earnings before interest, tax, depreciation and amortisation down in 2018 from £226m to between £165m and £185m.
The full year guidance remained unchanged and there was no new information concerning the shift in strategy. Investors could hear more after the Capital Markets Day on 27 June.
COMPETITION CONCERNS
Canaccord Genuity’s Nigel Parson is cautious on whether Just Eat can easily penetrate the quick service restaurant market, flagging existing ‘well-funded and innovative’ platforms such as Deliveroo, UberEats and Amazon Restaurants.
AJ Bell’s Russ Mould is concerned as the investment will impact Just Eat’s high-margin business model and notes some clients are being tempted to build their own online services due to Just Eat's higher costs.
CANADA REMAINS TOP DOG OVERSEAS
Canada remained the standout performer overseas, delivering triple-digit order growth. Italy and Spain enjoyed strong trading. The weakest link was Australia which experienced some ‘softness.’
International orders rose 46% to £21.9m over the period.
