Amazon-backed Deliveroo loses $309 million in 2020, IPO ahead

Amazon-backed food delivery service Deliveroo on Monday revealed that it saw a loss of £223.7 million ($309 million) in 2020, ahead of its plan to go public on the London Stock Exchange.

Deliveroo’s losses are significantly lower than 2019 losses, when the firm recorded a loss of £317 million. Although Deliveroo is still in the red, its revenues rose to £2.1 billion in 2020, up from £2.5 billion the year before.

According to reports, the food delivery service can be valued at almost $10 billion in the stock market listing. The date for Deliveroo’s initial public offering has not been announced officially but it may likely be in the coming weeks. The company has appointed Goldman Sachs and JP Morgan Cazenove as the joint global coordinators.

Deliveroo recently raised $180 million in a funding round, pushing its valuation to $7 billion. The company is also backed by Durable Capital Partners, General Catalyst, Fidelity, Accel, T. Rowe Price, and Index Ventures.

In its “Expected Intention To Float” filing published on March 8, Deliveroo CEO Will Shu said he never set out to be a CEO or founder, neither could he be considered as one of “those Silicon Valley types with a million ideas.”

“I had one idea. One idea born out of personal frustration. An idea that I was fanatically obsessed with: I wanted to get great food delivered from amazing London restaurants,” he said.

In 2020, Deliveroo suffered near-failure challenges amid the pandemic, until Amazon made a minority investment which boosted the profitability of the company towards the end of the year. Today, the food delivery service claims to have over 115,000 food merchants and 100,000 restaurants across 12 countries, with millions of customers.

According to Shu, Deliveroo is just “getting started.” He added that the company’s “ambitions have increased we start to truly understand and execute on the opportunity in front of us in online food.”

Ahead of its public filing, Deliveroo plans to reserve £50 million worth of shares for customers across the U.K.

“We are proud to be enabling our customers to participate in a future float and have the chance to buy shares,” Shu said. “Your loyalty and custom has helped build our business. I want you to have a chance to share in our future.”

Deliveroo also plans to give some of its busiest riders £10,000 ($13,850) bonuses when it goes public on the London Stock Exchange.

The company added that it will use the proceeds from the IPO to expand its operations and enhance its app. It will also put more focus on on-demand grocery deliveries, which are currently offered by supermarkets like Londis, Co-op, Aldi, Carrefour, and Waitrose.

Deliveroo’s IPO is one of the most anticipated initial public offerings in the first half of 2021.

“This valuation of Deliveroo seems excessive for a business which is still many years from profit, especially given that some hold significant doubt whether the home takeaway delivery model can become profitable outside London,” said John Colley, associate dean of Warwick Business School. “Indeed, the sole basis for this valuation appears to be immense amounts of cash looking for growth technology stocks.”