Deliveroo’s stock surged by 10% following the announcement of its first-ever profit.

In an article by Reuters, it was reported that Deliveroo, a British food delivery company supported by Amazon, achieved a modest profit for the first time in the first half of the year. The company announced a net profit of £1.3 million ($1.65 million) for the six months ending in June, a significant improvement from the £82.9 million loss recorded during the same period last year. This turnaround was attributed to a rise in consumer demand, with increased order frequency and better customer retention, driven by enhancements in their consumer value proposition.

Deliveroo’s gross transaction value rose by 6% to £3.7 billion, and its revenue increased by 2% to £1,028.2 million. The number of orders processed on its platform also grew by 2% to 147.4 million. Following the earnings report, Deliveroo’s shares surged 10% to £1.40, although they remain below the IPO price of £3.90. The company’s shares had previously dropped by 30% on the day of their initial public offering in 2021.

CEO and co-founder of Deliveroo expressed optimism about the future despite ongoing external uncertainties, noting positive shifts in consumer behavior across most markets. He emphasized that the Deliveroo platform is stronger than ever and that the company remains adaptable to external conditions while continuing to enhance its offerings for consumers, riders, and merchants.

Additionally, Deliveroo reported a positive free cash flow of £3.2 million for the first half of the year, a notable improvement from the negative free cash flow of £27.7 million in the same period of the previous year. The company has faced skepticism regarding its ability to turn a profit in the food delivery sector, which is known for being cost-intensive and low-margin, requiring significant scale to be competitive.

The food delivery industry has seen increased consolidation, with Uber acquiring Delivery Hero’s Foodpanda brand in Taiwan for $950 million in May to expand its Uber Eats platform. Deliveroo expects its full-year adjusted earnings before interest, tax, depreciation, and amortization for 2024 to be at the higher end of its previously forecasted range of £110 million to £130 million. The company also maintained its 2024 gross transaction value growth target of 5% to 9% and its guidance for positive annual free cash flow.

Furthermore, Deliveroo announced a £150 million share buyback, intending to purchase some of its issued shares on the market to reduce the number of shares in circulation and return cash to investors.