📉 Struggles for Profitability
Delivery Hero, the Berlin-based food delivery platform, has been in the spotlight recently due to pressure from the activist investor Sachem Head. CEO Niklas Östberg, who once promised growth at any cost, shifted focus to profitability as investor sentiment changed. Delivery Hero’s revenue soared from €2.8B in 2020 to €6.4B in 2021. However, with rising interest rates, the focus turned to profitability. In the past year, Delivery Hero reported a positive adjusted EBITDA of €254M, though some investors find this metric less meaningful. Confusion and uncertainty about the company’s future persist among investors.
🛠️ Sachem Head’s Push for Change
Sachem Head, a New York-based investment firm, entered the scene in April 2024, acquiring a 3.6% stake in Delivery Hero. The firm is pushing for significant changes, including expanding the board from six to eight members. According to insiders, Sachem Head founder Scott Ferguson aims to replace CEO Östberg. The proposed changes have found some support among major shareholders like Prosus, which holds 25%, and Baillie Gifford, with 5-10%. A source familiar with the situation noted, "Investors are unhappy with the stock performance. Having Ferguson on the board will bring a stronger market perspective."
💼 Recent Strategic Moves
Despite the internal turmoil, Delivery Hero has been making strategic moves to streamline its operations. In May 2024, Delivery Hero sold its Taiwan business to Uber Eats for €878M and secured an additional €277M from Uber's equity investment. This move followed other divestments and market exits in Vietnam, Slovakia, Denmark, Slovenia, and Ghana. CEO Östberg stated, "We must focus our resources on key markets." These efforts aim to improve profitability and operational efficiency. However, these divestments reflect a broader strategy to exit less profitable markets.
📈 Future Outlook
Delivery Hero’s financial performance has shown signs of improvement. The company’s revenue grew by 13% in 2023, reaching €10.5B. In the first quarter of 2024, revenue increased by 21% year-over-year. This positive trend led the company to revise its growth forecast for 2024 to 18-21%. The operational cash flow also improved from -€689M in 2022 to -€20M in 2023. Despite these gains, the company faces ongoing challenges, including maintaining investor confidence and navigating the competitive landscape. The upcoming board changes and strategic focus on profitability will be critical in shaping Delivery Hero's future.
Can Delivery Hero achieve profitability with the new board changes?
