Food delivery startup Deliveroo today shared partial earnings data ahead of its upcoming initial public offering, revealing that it logged a big jump in customer orders last year and narrowed but still substantial losses.

The IPO will give the startup an opportunity to capitalize on the recent increase in investor interest around food delivery providers. Multiple market players have raised funding or begun stock listing preparations in recent months. 

London-based Deliveroo, incorporated as Roofoods Ltd., is reportedly expected to receive a valuation of approximately $10 billion in the IPO. That puts the offering on track to be one of the biggest of the year so far in the consumer tech category. 

Deliveroo’s namesake food delivery app, which is available in the U.K. and 11 other markets worldwide, has about 6 million customers. Those customers placed orders worth a total of £4.1 billion, or about $5.67 billion, in 2020, a sizable 64% increase from the £2.5 billion in orders Deliveroo processed the prior year. The company picked up yet more momentum in the fourth quarter of 2020 and grew its annual run rate to £5 billion or $6.92 billion.

Deliveroo didn’t elaborate on how the increased customer activity translated into revenues. But the startup provided detailed information on its bottom line, revealing that its losses narrowed in 2020 as orders surged. Deliveroo lost £223.7 million, the equivalent of $309 million, in 2020,  £100 million less than during 2019. It claims to have achieved two quarters with positive earnings before interest, taxes, depreciation and amortization.

The combination of growing sales and decreasing losses puts Deliveroo in a potentially strong position to draw investors to the IPO. The offering is scheduled for April.

If the $10 billion market capitalization insiders are expecting materializes, the startup will begin its first day as a publicly traded company worth at least $3 billion more than after its last private funding round. That investment, which was announced in January, saw Deliveroo raise $180 million from backers including Amazon.com Inc. at a $7 billion valuation.

Amazon’s backing of the startup could potentially also help it win over investors.

Deliveroo said it will use the proceeds from the IPO to expand in the restaurant food delivery market and beyond. Like other major food delivery providers, Deliveroo is moving into new segments in pursuit of growth opportunities. Following the listing, the startup intends to build a bigger presence in the grocery delivery market and expand its network of Editions-branded delivery-only kitchens, as well as invest in other areas including technology services for restaurants.

Deliveroo’s planned expansion of its grocery delivery operations comes as one of the biggest players in that segment reportedly prepares for its own stock market debut. Instacart Inc., which is currently valued at $39 billion, is said to be exploring the possibility of going public via a direct listing. Similarly to Deliveroo, Instacart’s business comprises not only deliveries but also other offerings, including technology tools for merchants. 

Photo: Deliveroo