Analyst Note| Ioannis Pontikis, CFA |
Following the second-quarter trading update on July 15, Just Eat Takeaway reported half-year 2021 results with revenue, orders and general transaction value, or GTV, up 52%, 51% and 46% respectively (at constant currency). Management reiterated guidance (provided in the second quarter) of higher-than-45% order growth excluding Grubhub, in fiscal 2021 (versus at least 42% previously), and fiscal 2021 adjusted EBITDA margin and gross transaction value growth of negative 1% to 1.5% (EUR 360.00 million EBITDA loss at the midpoint) and EUR 28.00 billion-30.00 billion respectively. Within this, the midpoint of adjusted EBITDA guidance (about EUR 360.00 million) implies about EUR 170.00 million EBITDA losses in the second half, which is in line with management's commentary on the call ("expect slightly lower EBITDA losses in the second half"). Given that fee caps and voluntary rebates were about EUR 142.00 million in the first half, while the group has gradually started increasing delivery pricing (in August) without a noticeable impact on growth (EUR 81.00 million benefit had these increases been implemented in the first half), we think EBITDA guidance is fairly conservative and gives management lots of flexibility to increase investments in core countries/markets where the group faces stiff competition (United States and United Kingdom). We don't anticipate significantly changing our fair value estimate for Just Eat after incorporating half-year results and the Grubhub pro forma financials in our model. Shares trade deep in 5-star territory, presenting a material opportunity with a strong margin of safety for patient investors.