📊 Creative Financial Reporting
Delivery Hero, a major player in the delivery service industry, held its annual general meeting on June 19th. The meeting highlighted a concerning trend in the company's financial reporting. Instead of focusing on profit and sales, the company emphasized gross merchandise volume, total segment revenue, and adjusted EBITDA. These figures, while significant, often obscure the real financial health of the company. Gross merchandise volume represents the value of all orders on the platform, not actual sales. Investors must dig deep into the reports to uncover the truth.
💸 Questionable Metrics
Total segment revenue, as reported by Delivery Hero, includes sales before deducting vouchers, which is unconventional. This creative reporting style can mislead investors about the company's true earnings. Regular sales figures, hidden on page 56 of the annual report, show that vouchers cost the company around $560M in 2023. This creative accounting masks the company's real performance and raises questions about its transparency.
📈 EBITDA Adjustments
Delivery Hero’s use of adjusted EBITDA further complicates its financial picture. EBITDA, a profit measure excluding interest, taxes, and depreciation, can be adjusted in many ways. For 2023, the company reported a positive adjusted EBITDA of $278M, a sharp contrast to the previous year's $511M loss. However, the true bottom line, buried in the annual report, reveals a $2.5B loss. This stark difference highlights the need for investors to scrutinize the figures closely.
🔍 Real Financial Health
Despite the reported adjusted EBITDA, Delivery Hero's financial health remains troubling. The company's sales in 2023 were $10.9B, a 16% increase from 2022. Yet, this growth is a significant slowdown compared to the 46% growth in 2022 and 137% in 2021. This decline in growth rate, coupled with the hidden $2.5B loss, suggests the company is far from profitable. Investors must look beyond the surface numbers to understand the true state of Delivery Hero’s finances.
Should companies be allowed to use such creative accounting?
