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Stock Analyst Update

Just Eat Takeaway’s Earnings Show Gains in Europe, U.K.

Shares of the food delivery company are now trading in 5-star territory.

Just Eat Takeaway reported half-year 2022 results with total orders down 7%, flat gross transaction value, and revenue up 1%. North America was the main detractor with revenue down 5%, which was more than offset by European operations (Northern Europe up 6%, United Kingdom and Ireland up 10%, Southern Europe and Australia/New Zealand up 6%).

Adjusted EBITDA improved at the group level to minus EUR 134 million from minus EUR 189 million a year ago. More importantly, on guidance, management reiterated its outlook for fiscal 2022 (GTV growing by midsingle digits and adjusted EBITDA margin in the range of minus 0.5% to minus 0.7% of GTV versus 0.5% and minus 0.7% in our model respectively).

Management also expects to reach positive adjusted EBITDA in 2023 at the group level (versus slightly positive in our model) and confirms long-term targets (in excess of EUR 30 billion of GTV added over the next five years and long-term group adjusted EBITDA margin in excess of 5% of GTV versus EUR 19 billion by 2026 and 4.3% by 2030 in our model). We maintain our EUR 81 fair value estimate and narrow moat rating for Just Eat. Guidance implies about 10% GTV growth and minus 0.3% of GTV adjusted EBITDA margin in the second half, which although higher than our estimates we view as achievable.

Regardless of current-year beats or misses, the potential divestment of iFood or Grubhub, market exits from unprofitable regions (France and Australia), and a return to profitable growth for Grubhub (aided by the recent Amazon deal) are the main catalysts in the short to medium term, in our opinion. In the long term, we expect market rationalization to continue (no new entrants and lower competitive intensity among incumbents) along with insurmountable barriers to entry (given incumbents have now achieved large scale in many cases) and the secular trend of online food ordering to be the main drivers of value creation, underpinning our constructive view of the sector. Shares trade deep in 5-star territory.