Analyst Group Comments on OrderYOYO’s Q3-23 Trading Update

OrderYOYO announced on Wednesday, October 18th, the company’s performance during Q3-23 and shows a continued strong performance.

OrderYOYO’s ARR amounted to DKK 256m in September 2023, corresponding to a growth of 38% compared to September 2022 figures of DKK 185m. The net revenue amounted to DKK 65m during Q3-23, compared to DKK 45m during Q3-22, corresponding to a growth of 44% Y-Y. EBITDA before other extraordinary items amounted to DKK 7.5m in Q3-23 compared to DKK 1.9m in Q3-22, corresponding to a growth of 295% and a margin of 11.5% (4.2%). The company delivered an annualized GMV of DKK 2,438m in September 2023, compared to DKK 1,868m in September 2022. As mentioned in connection with the H1-23 report, OrderYOYO showed a positive Cash EBITDA in June (defined as EBITDA before other extraordinary items minus capitalized R&D expenditures), something that has continued all months in Q3-23, meaning that the organic operations are now self-sustaining and independent of external capital.

Consolidated 2023 Guidance Raised again

Given that OrderYOYO continued to show a strong development during Q3-23, the company raised its consolidated guidance for FY2023 for the fourth time this year, where the biggest change is in the operational EBITDA, where OrderYOYO is guiding for and EBITDA margin of 8-10% for the full year. The significant rise in guidance for EBITDA again proves the scalable business model that OrderYOYO possesses.

Consolidated 2024 guidance released

In connection with the trading update for Q3-23, OrderYOYO also released guidance for the full year 2024. The company guides for ARR to reach DKK 300-310m by December 2024, compared to DKK 260-270m in December 2023, which corresponds to a growth of 15%, given the mid-range of guidance. Moreover, EBITDA before other extraordinary items is expected to grow 19%, given the mid-range of guidance, where the stronger expected growth in EBITDA than ARR and revenue demonstrates continued margin expansion. The full guidance for 2024 can be found in the table below.

”OrderYOYO continues the strong growth during the third quarter and are continuing to gain market shares despite a tough market, which proves the company’s strong value proposition to its restaurant partners. The strong growth in ARR and revenue is attributable to a strong growth in GMV, which are estimated to be derived from both existing and new restaurant partners. In addition, OrderYOYO released a new, entirely cloud-based, POS system which offers several advantages for restaurant partners, including, among other things, an intelligent delivery system and a CRM system, which is expected to strengthen OrderYOYO’s offer and the fixed subscription fees. Furthermore, the margin expansion continues as the EBITDA margin amounted to 11.5%, compared to 4.2% in Q3-22 and 8% during H1-23, which continues to prove the scalable business model and increased economies of scale.

The strong development should be seen in the light of the current challenging macroeconomic situation with continued high inflation and rising interest rates. The combination of high input prices for restaurants and reduced purchasing power for consumers impacts restaurants significantly, why OrderYOYO’s ability to grow both through existing and new customers proves the company’s strong value proposition regarding solving digital challenges for the restaurant partners. However, there are bright spots regarding inflation, which is tapering down in most economies worldwide. The UK, OrderYOYO’s second-largest market, recently released data for the month of September, indicating a 0.2% month-over-month decrease in prices for food and non-alcoholic beverages compared to August, marking the first monthly decline since September 2021. However, the year-over-year price increase for food and non-alcoholic beverages remains high at 12%, indicating persistent high inflation. As macroeconomic factors continue to improve, Analyst Group estimates that OrderYOYO’s churn, which amounted to 7.7% in H2-22 – H1-23, will decrease further, which we view as an important driver for continued ARR growth going forward”, says the analyst at Analyst Group covering OrderYOYO.

We will return with an updated equity research report of OrderYOYO.