Just Eat serves up 41% Q3 revenue rise

1st Nov 2018 07:18

(Sharecast News) - Increased orders from its online takeaway food marketplace and growing demand for delivery services drove sales for Just Eat in the third quarter, but it said increased investment overseas will weigh on full year earnings.Revenue rose 41% in the quarter to £195.3m and the FTSE 100 group said it expected full year revenues to be towards the top end of the £740-770m range.Underlying earnings, however, will be towards the lower end of the £165-185m previous guidance, primarily due to investments in the "dynamic" Latin American markets and in various delivery initiatives.Group orders were up 27% to £54.7m with more than 57% of orders being made via mobile app compared with the same period last year.UK orders increased by 16% to £30.3m, driven by strong trading in September, including Just Eat's first ever weekend with more than one million orders, reducing the impact of exceptionally hot weather in July and August. International order growth was strong again at 44%.With the shares having dropped by a third since the highs of late July due to concerns about competition from Deliveroo and Uber Eats, the positive update saw investors' appetite return, with shares in Just Eat up more than 5% by midday on Thursday to 640.8p."This solid set of results reflects well on the resilience of the UK business," said UBS, "but we suspect JE needs to post a few robust quarters of double-digit organic UK order growth to allay competition fears."The tightened-up outlook reflects the growth and investment in delivery services, the UBS analysts added, though the £165m lower end of the new EBITDA guidance offers potential high single-digit downside to consensus forecast of £183m. driven by Latam/delivery investmentsBelieving UK like-for-like sales is a "key area of focus" for investors, given competition concerns, the analysts predicted double-digit UK order growth in 2019 with low single-digit margin pressure "is key for investors to gain confidence in the resilience of the UK asset, and to the re-rating of the stock".