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Just Eat Earnings: Profit and Free Cash Flow Ahead While Fiscal 2023 Guidance Achievable

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Securities In This Article
Just Eat Takeaway.com NV
(TKWY)

Just Eat Takeaway TKWY reported half-year 2023 results with total orders down 12% and gross transaction value down 7%, broadly in line with expectations. The Southern Europe, Australia, and New Zealand market, and Grubhub continue to be the main detractors with orders down 17% and 15% respectively. On a positive note, GTV and revenue improved in the important Northern Europe market (GTV up 2%, revenue up 10%) and in the U.K. and Ireland market (GTV down 3%, revenue down 4%) in the first half while trends are positive in the second quarter versus 2022 (GTV was up 3% in both Northern Europe and the U.K. and Ireland). Half-year adjusted EBITDA improved to EUR 143 million (EUR 277 million change versus last year) driven by delivery efficiencies and savings (Grubhub’s restructuring resulted in $30 million run-rate savings from 2024). On guidance, management confirmed its outlook for fiscal 2023 adjusted EBITDA of EUR 275 million and also top-line guidance (GTV growth from negative 4% to 2% with growth skewed toward the end of the year given soft comps from 2022). Top-line guidance implies down 1% to up 11% GTV growth in the second half. We think conservative EBITDA guidance allows for flexibility in much-needed demand-generating marketing investments in the second half, investments that could render the midpoint of top-line guidance achievable. Free cash flow before changes in working capital improved to negative EUR 78 million (from negative EUR 407 million a year ago) or negative EUR 16 million excluding one-offs and exceptionals. Management also expects free cash flow (excluding working capital movements) to turn positive in mid-2024, which we think is achievable given profitability improvements and cost controls.

Although we expect to tweak our midterm top-line and bottom-line expectations after we digest the results, we don’t expect to materially change our EUR 81 fair value estimate as our long-term value drivers remain intact. Shares trade deep in 5-star territory.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Ioannis Pontikis

Director of Equity Research in Europe
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Ioannis Pontikis, CFA, is a Director of Equity Research in Europe for Morningstar, where he covers European grocers and global food and beverage companies like Tesco, Unilever, Nestle, and Danone, and manages a team of eight analysts across the Financials and Consumer sectors. He also leads Morningstar’s Equity Research Valuation Committee, advancing the firm's valuation methodology through significant projects such as developing new methodologies, refining our valuation model, and enhancing the efficacy of our ratings.

Before joining Morningstar in 2017, Pontikis spent six years on the buy-side, co-managing a $100M long/short equity fund and leading teams in applying machine learning to stock and equity factor selection models. He developed the fund's valuation and risk assessment framework, achieving strong risk-adjusted performance. Prior to this, Pontikis worked at Nestle S.A. in Athens, focusing on financial reporting, budgeting, and auditing proposals to improve processes.

Pontikis research has appeared in numerous media outlets including Bloomberg, CNBC, Reuters, Guardian, Frankfurter Allgemeine Zeitung among others.

Pontikis holds a bachelor’s degree in business administration from the University of Piraeus’s and a master’s degree in accounting and finance from the London School of Economics. He also holds the Chartered Financial Analyst® designation and studying towards an advanced post-masters degree in portfolio and risk management.

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