The Delivery Hero (WKN: A2E4K4) share will now officially move up to the DAX and the insolvent there Wirecard (WKN: 747206) replace. Delivery Hero is a rather unusual DAX candidate. Reason enough to take a closer look at the stock.
Sales growth 2019: 86%
The company itself is only a service provider and does not sell its own products, but offers a platform on which restaurants can set up their offerings. The entire order including delivery is then processed by Delivery Hero. The pandemic has of course given the business a lot of momentum. Especially when the restaurants had to close their own premises, the importance of deliveries increased enormously.
In the second quarter, sales increased by 96% compared to the same quarter of the previous year. In the past financial year, Delivery Hero was able to achieve a sales growth of 86%. During this period, sales rose from EUR 665.1 million in the previous year to EUR 1.24 billion. This year it is expected to double again and as the figures for the second fiscal quarter show, we are well on the way there.
Orders: 666 million
Because the number of orders keeps increasing. In the last financial year, Delivery Hero handled 666 million orders in the 43 countries in which it is active. In the second quarter alone, the number of orders rose by 95% to 281 million. The company certainly does not have a growth problem.
Loss 2019: 663.4 million euros
The enormous rate of growth has torn the share price up with it. The rate has more than doubled over the past twelve months. At the current price of 96.18 euros (as of August 21, 2020) Delivery Hero is valued at more than 19 billion euros.
Despite or maybe because of the gigantic growth, there can be no talk of profits so far. In the quarterly reports, Delivery Hero apparently tries very hard to direct the focus on sales and not to mention the losses as directly as possible.
Probably for good reason. In the last financial year alone, the pre-tax loss was EUR 668 million! So Delivery Hero has done the trick and posted a loss of more than 50% of sales. Compared to the previous year, profit rose even faster than sales. Of the 258.8 million euros reported as a pre-tax loss in the previous year, the loss has soared by more than 150%.
Marketing expenses: 495 million euros
The good news is that Delivery Hero is principally profitable. Sales of 1.2 billion euros were offset by 926 million euros in costs directly related to sales. The profit from the business was therefore 311 million euros. The bad news is that that’s nowhere near enough to cover the administrative and IT costs. These two items alone cost 468 million euros last year. Then there were marketing costs of 495 million euros, which massively increased the loss.
The question arises whether marketing costs will continue to rise with sales this year or whether they will stabilize at the level of last year. Because if costs continue to rise, it becomes more difficult to contain losses. So the most important question to answer is how sustainable the business is. Does Delivery Hero really need to put tons of money into marketing to grow or keep existing customers? Or would you perhaps get by with lower investments and then possibly break even faster?
The post DAX climber Delivery Hero: Investors now need to know these key figures appeared first on The Motley Fool Deutschland.
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Dennis Zeipert has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Motley Fool Deutschland 2020
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