LONDON (Alliance News) - Despite Just Eat PLC raising its annual revenue guidance on Tuesday, shares in the online takeaway platform fell as it upped its spending guidance and left its earnings forecast unchanged.
Shares in Just East were down 5.9% at 796.80 pence on Tuesday, making the company the worst performer in the FTSE 100 index of London large-caps.
For the first half of 2018, Just Eat said revenue rose 45% to GBP358.4 million from GBP246.6 million year-on-year. Pretax profit declined 3% to GBP48.1 million from GBP49.5 million, due to costs associated with its acquisition of smaller peer Hungryhouse, which completed in January.
"These results reflect increased investment, specifically in key areas such as marketing, technology and product development. These improvements are benefiting both sides of our marketplace and providing a solid platform for the launch of delivery services," said Just Eat.
Customers orders increased 30% to 104.4 million from 80.4 million in the same period a year ago, as more people ordered via the Just Eat app. Orders via mobile app accounted for 54% of the total orders compared to 46% last year.
Within geographies, UK revenue grew 30% to GBP182.7 million, sales in Canada more than tripled to GBP73.0 million due to a strong performance from SkipThedishes, while International revenue rose 36% to GBP81.1 million due to order growth in Italy, Spain and Mexico. Revenue in Australia fell 8% to GBP21.6 million.
Just Eat's non-UK businesses now generate 49% of group revenue, up from 43% a year earlier.
The FTSE 100-listed company said that, confident in its current performance, it now expects full-year revenue of between GBP740 million and GBP770 million, up from previous expectations of between GBP660 million and GBP700 million.
"The key, as usual, lies with the outlook. Just Eat management was confident enough to raise FY revenue guidance, but left the profit outlook unchanged, suggesting lower margins for the year and leaving investors with a sour taste in the mouth," said Artjom Hatsaturjants, research analyst at Accendo Markets.
This comes as analysts also had been left disappointed following Just Eat's annual results, reported in March, with what felt like conservative guidance for 2018.
Just Eat had guided to underlying earnings before interest, tax, depreciation and amortisation in a range of GBP165.0 million to GBP185.0 million for the year. This was around GBP40 million to GBP60 million lower than consensus of GBP225 million.
The lower-than-expected annual guidance in March had largely been due to Just Eat's decision to invest in logistics, in order to keep up with rivals.
As well as raising revenue guidance on Tuesday, Just Eat upped its investment for long-term growth to between a range of GBP55 million to GBP60 million, from GBP50 million previously.
"The highly aggressive sector competition (from the likes of Deliveroo and Uber Eats) appears to be forcing Just Eat to keep investing in growth," commented Hatsaturjants.
The company said it invested GBP24 million in the first half of the year, which included driving growth in Canada and launching SkipTheDishes technology in Australia, as well as scaling delivery for branded restaurants and "nurturing" its business in earlier-stage markets.
Just Eat's UK underlying Ebitda margin in the half slipped to 49% from 52% a year ago, which the company said reflected investment in marketing, technology and delivery.
"We anticipate increased expenditure in the second half of the year as we continue to roll out delivery services and enhance our brand, particularly with our recently announced sponsorship of X Factor for a second season," said Just Eat.
