Analyst Note| Ioannis Pontikis |
Just Eat Takeaway reported a fourth-quarter trading update with total orders down 12%, and gross transaction value down 2% (down 6% at constant currency) broadly in line with our estimates (EUR 28.22 billion GTV versus EUR 28.35 billion in our model). Similar to third-quarter trends Southern Europe, Australia, and New Zealand; and the U.K. and Ireland were the main detractors with GTV down 15% and 3% respectively, which was partially offset by the rest of the group (Northern Europe up 3%, North America down 2% aided by currency, down 11% at constant currency). Order declines were broadly expected due to tough comparables and a lower number of low-contribution orders, while GTV growth is the product of higher average order values (restaurants passing on inflation and Just Eat reducing the number of low-value orders) as well as positive currency effects. On guidance, management introduced a fresh outlook for fiscal 2023 (no specific GTV or order growth guidance was given, but management said growth should be skewed toward the end of the year given soft comps from last year) with adjusted EBITDA expected to be about EUR 225 million, a number that includes "investments in food and nonfood adjacencies and wage costs inflation, and takes into account the uncertain macroeconomic environment." Given the significant beat on actual and guided adjusted EBITDA (EUR 16 million in fiscal 2022 versus EUR 130 million EBITDA losses for FactSet consensus and guidance for EUR 225 million in 2023 versus EUR 130 million for FactSet consensus), shares reacted positively, rising as high as 15% at the of time of writing. With the iFood sale now complete, our expected fair value estimate reduction for Just Eat by about 5% to reflect the lower sale price (EUR 1.8 billion versus EUR 2.6 billion in our sum-of-the-parts analysis) is offset by time value of money since our last model update. Therefore, we maintain our EUR 81 fair value estimate and narrow moat rating for Just Eat Takeaway.