October 31, 2019 / 6:57 AM / 20 days ago

UPDATE 2-Delivery Hero raises revenue target after Q3 jump

(Adds analyst comments and background, updates share price)

By Zuzanna Szymanska

Oct 31 (Reuters) - German food delivery company Delivery Hero raised its 2019 revenue guidance for the fourth time as increased investments helped boost order volumes.

The Berlin-based company said it recorded a ramp-up in order volumes helped by its own delivery capabilities and targeted customer acquisition investments.

“We continue to allocate resources to the markets with the most compelling long-term opportunities,” Chief Executive Niklas Östberg said in a statement.

It raised its full-year revenue guidance to 1.44 billion-1.48 billion euros ($1.61 billion-$1.65 billion) from 1.3 billion-1.4 billion euros.

Delivery Hero shares were up about 4.5% in early Frankfurt trading.

Half of Delivery Hero’s gross merchandise volume is currently generated in profitable markets, while best-in-class markets achieved an EBITDA margin over 50%, the company said.

“In an era when fears abound around sector growth and returns, Delivery Hero’s execution and decision to pursue growth investments in unencumbered markets made total sense,” Jefferies analysts said.

Strength in Asia in particular suggests that the company’s significant investment in the region is paying off, analysts at Credit Suisse said.

The brokerage added it takes the focus of Delivery Hero’s third-quarter release on new initiatives such as dark stores, virtual restaurants and multi-vertical offerings as a positive, especially considering the competitive landscape in online food delivery.

Third-quarter revenue rose 117% to 391 million euros on a constant-currency basis and topped the 360 million expected on average by analysts in a Refinitiv poll.

The firm maintained its outlook for earnings before interest, taxes, depreciation and amortisation (EBITDA), but said it expected to reach the lower end of the previously announced range because of the accelerated investments.

Europe is expected to reach adjusted EBITDA break-even in the fourth quarter, it said.

The German company hit headlines this week after a shareholder accused it of undermining one of the two rival offers in a takeover battle for British food ordering service Just Eat, a claim which Delivery Hero denied.

$1 = 0.8962 euros $1 = 0.8961 euros Reporting by Zuzanna Szymanska in Gdansk; Editing by Muralikumar Anantharaman & Shri Navaratnam

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